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Price pressure continues downward as all segments except wages slip.

Raw materials drop .01cc in food and weapons pushing the Raw Material Index to an historic low of 51.11 (that represents 51.11% of the price on Day 1600).

Most qualities of food slip a bit with only Q6 seeing improvement and Q1 holding its price. The Food Index drops to 79.21.

There's some strength in the middle prices on weapons (Q2-Q5) but the ends give ground, with Q6 dropping a significant 1.62% leading the Weapon Index lower to another record low of 77.91.

Wages continue their run returning the Wage Index to 100, the exact same level as on Day 1600.

Gold once again has a small marginal drop moving the Gold Index to 127.05

The weighted Index:


The last 10 days


The 1600 AU Index
Based off of the amount of gold a player could earn in a year by working at market wage, selling 20 weapons, 200 food (both Q6) and 1750 raw materials (split 50/50 food/weapons) the 1600 AU Index falls for the fifth day. Pricing pressure on raw material, food, and weapons offset modest improvements in wages and gold prices.



We here at The 1600 Index were wondering how it could be that wages were continuing to rise in the face of falling prices. Devotees of The 1600 Index will remember this wage graph:

There's been a significant wage run-up since Day 1620, going from $240 to $295. We hold that falling prices and falling raw materials should hold wages down, but the opposite has happened in the past two weeks. We slapped together a simple chart that tracks profitability of weapons companies assuming 1) they buy all their raw materials on the open market, 2) they sell the finished goods at market prices, and 3) pay market wages. The profitability of each level:

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As you can see Q1-Q3 are never profitable, Q4 only can be if wages are under $250, and even then just barely. Q5 does solid work until prices collapse on Day 1631 (second day of the company upgrade sale) and now are flirting with break-even. Only Q6 is a money-maker.

Wondering what effects profit more, market price, wages, or raw materials we at The 1600 Index put together these graphs. Because who doesn't love a graph? Seriously.

First graph over profit per employee (EE)


Next overlay that with price of raw materials (remember in our example we're buying ALL the RM). Profit on the left axis, raw material on the right axis. As the raw material line decreases, profit should increase.

Shot at 2012-05-11
We can see that as raw materials drop in price there is in increase in profits but it only matches up well at the start, Day 1600-1607. The big jump in profits (day 1619-1622) happens despite a small drop in raw material price.

Lets overlay with market price. Unlike raw materials, we're not looking at an inverse relationship (as one goes down the other should go up) but a similar relationship (as prices rise, profits rise):


That doesn't work. There's almost no correlation there except day 1629 on. For the most part market prices for Q6 are dropping or steady but profit doesn't follow.

So it must be wage driven? If its only a bit raw material and not too much the selling price, then the only thing left is wages:


Whelp, there's yer inverse relationship. The two lines are practically a mirror image of each other. As wages decline, profit soars and as wages rise, profit takes a dive.

The question becomes how much less profit are Q6 owners willing to take before wages drop. Q5 company owners are almost out of the game - once wages push $20 higher Q5s are in a loss situation (unless Q5 market prices go up)


Note: prices are reflective of a percentage of Day 1600's price (Hence the "1600 Index"). In other words if an index is quoted at 88, that days price is 88% of the price on Day 1600.

Methodology on prices: prices are taken at 3:00 eRep time. The price is the average price of buying 1,000 Raw materials, 500 Food, 100 weapons (at each quality level), and 8 gold, plus the market wage less any fraction of cc (so 240, rather than 240.1). All qualities are standardized to Q1 (per hit or per health).

Sic transit gloria mundi