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 An Example of Merchent Trade.

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BradleyKell




Posts : 52
Join date : 2013-05-20

An Example of Merchent Trade. Empty
PostSubject: An Example of Merchent Trade.   An Example of Merchent Trade. I_icon_minitimeMon May 27, 2013 1:52 pm

Alright, this is an Example of how a Merchant takes advantage of his Skill and Ability, uses some Ingenuity, and comes out of the entire ordeal with a good deal.

To impliment this exact scenario (aside from Prices, which change constantly) you will need Cooking and Food Trading, and to get better deals you will need Accountant for Market Rates and Haggle.

Accountant will allow you to see the Market Rates so you know the best deals. In this case we are solely dealing with 1 Trade Good Item, that being Wheat. So unless the Market had Wheat at say 200% or so, I'd still buy it FOR THIS TYPE OF DEAL. In almost every scenario, you want to Buy Low (at 100% or Less) and Sell High (More than you paid for the goods). In a typical deal you are looking for a ROI (Return on Investment) of no less than 25%. So if you buy X for 100 Ducats, your desire is to sell X elsewhere for absolutely no less than 125 Ducats. But that is a matter for another class.

So now we find ourself in Breman (East of Amsterdam, but not of real importance for this exercise). Breman (Antwerp, Lubeck and Nantes) all sell Wheat in Northern Europe. For a Cook, this is invaluable to have so many ports so close. So on this beautiful day in Breman we think to ourself what we always think to ourself... "I've got 5 Minutes, and I want some fast Profit that raises Skills at the same time".

So what do we do?

First, we go to the Market and buy up all the Wheat we can get. Due to Food Trading R1 (Rank 1, the lowest) I can buy more Bulk Food Items, so I am able to land 50 Wheat at the Market. I use Haggle, which actually drops my Unit Price to 37.52 Ducats, costing me 1,876 Ducats.

So now I am 1,876 Ducats poorer, but 50 Wheat Richer. The cost would have been higher (I believe 40 Ducats a Unit at 2,000 Ducats total) had I not Haggled. Here is a Note: Haggle costs Vigor. So ensure that when you Haggle it is at a time when you have a large amount of coin on the line. Also, the Higher the Rates the more you can Haggle the Price down. An already Rock Bottom Price will be hard to Haggle, and if you do the savings will be much smaller. But every savings is a good savings, and as a Merchant one should haggle all the time. Why do we care that it costs Vigour to Haggle? Because a TRUE MERCHANT will put the Vigour Costs into Ducats and add that with his Transaction. The Vigour you spend needs to be replaced.

So, 1,876 Ducats lighter, 50 Wheat heavier. Now I open Cooking up, and see that I can Mill... I can turn 1 Wheat into Flour.

I begin my Milling Process. I end up with 97 Flour. I almost received 2 Flour per every 1 Wheat, so now I have many more Units. This takes my Unit Price from 37.52 Ducats down to a mere 19 Ducats.

What does this mean? It means had I left the Goods as Wheat I would need to sell Wheat at 38 Ducats to make a Slim Profit, but as Flour I only need to reach 20 Ducats for a Slim Profit.

Lucky for me, Flour actually goes Per Unit for 52 Ducats. That is even more than I paid for the Wheat, so had I only got a 1 for 1 Conversion Rate this still would have been very Profitable, at 14.48 Ducat Profit Per Unit, or 724 Ducat Profits.

Instead, we have 97 Flour going for 52 Ducats, hauling in 5,044 Ducats. This is a Profit of 3,194 Ducats off of our Wheat Buy of 1,876 Ducats.

That is a 269% ROI. Much better than our 25% Minimum we look for. I quiet literally nearly Tripled my Investment.

However, these are not the only Costs. Lets add the Bar Tab to the mix. I used Vigour to Haggle, and Vigour to turn Wheat into Flour. After all, work has a cost and our cost is Vigour. It took 148 Ducats at the Tavern to fill my Vigour, and I had to do this twice. (Well, 4 times. Took 54 Ducats for the best the Tavern had, used it twice to fill once. Left port after spending Vigour again, Tavern twice and back to full Vigour again). So we need to add 298 Ducats to our Cost. This leaves a True Profit of 2,896. Still an amazing ROI.

Let's do it once more in Antwerp, an abridged version.

Wheat is at 108% in Antwerp, at 43 Ducats a Unit. Good enough for this move. I am starting with Full Vigour.

I pick up 65 Wheat. 2,572 Ducats, I Haggle and Fail. So Rates will stay locked for this Exercise. Still, no worry... we will turn this into a Win.

I was able to convert 39 Units of Wheat into 74 Units of Flour with my Vigour. Now, to the Tavern. 168 Ducats for 2 Meals. I now continue to convert the other 26 Units of Wheat into 52 more Units of Flour. This gives me 126 Units of Flour for 65 Units of Wheat.

Now, to the Market!

We have now made the Flour a 20 Ducat a Unit Item, and we have 126 Units. Flour is going again for 56 Ducats (again, more than we paid for the Wheat by 13 Ducats a Unit). However, I can still Haggle. At this Price Point we have 7,056 in Sells waiting. Let's press our luck. The Haggle works! 57 Ducats a unit now, for 7,182 in Sells waiting. We improved or Price by 126 Ducats!

This makes our Trade Profit for this movement 4,647 Ducats over what we paid for the Wheat (2,572 Ducats). Add in 168 Ducats for the Tavern (and double it, since we need to go back to fill it, so 376 Ducats) and we still have 4,271 in Profits.

So take 2,572 Ducats and add 376 Ducats for 2,948 Invested. Divide 7,182 Ducats Total Sell by the 2,948 Total Invested and you get 244% ROI. Again, we more than Double our Investment, and gain Cooking Skill and Food Buyer Skill in the Process.

Note: This will not make you RICH. But it WILL allow you to quickly double some Ducats (almost Triple) so you have more Capital for other moves, like Trading Local Goods such as Dutch Calico.

Also, this is a Level 1 Cooking Recipe, higher Recipes have the chance for Higher Profits and Higher Sells.

Thank you for attending this Lecture! Now, go forth and prosper!









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