Perceived Value or why the transmog market works

Sometimes when playing this portion of the game many of us are tempted to look at it through the lense of a real business.  This temptation is greatest for those of us who spend a good portion of their working day looking at profit and loss calculations.  (why the hell do we do it in a game after work?)

A few days back while setting up a vanity guild for one of my transmog sellers I ended up in a conversation with another player.  This player was asking me what my plans for this guild was.  I pointed out the guild’s name, which was a joke on the movie title “Devil wears Prada” and let him know it was a vanity guild for a transmog seller.  He thought this was a cool idea, and then asked if I was planning on doing tranmog runs through dungeons.  I was taken aback as I was currently playing a deathknight and my interest in actually playing one fades quickly after completing their starting zone.  I hate to think about how many I have rolled, played and deleted.  I told him that I was not planning on doing transmog runs on this character at least.  He asked then where was I going to get all my transmog gear to sell.

My answer shocked him and started another conversation.  I told him I buy it in the auction house.  He seemed puzzled by this, and asked why would they buy it from you if you just buy it from the auction house. I pointed out, not telling him my price cut offs, that I buy all I can get my hands on and relist it.  He said that is crazy and wished me luck.  At this point I had the required signatures and was able to register my new guild.  

It got me thinking, the transmogrification market is crazy.  Why does it work?  It works due to a simple business principle.  The principle of Perceived Value.  Which is defined as:

A customer's opinion of a product's value to him or her. It may have little or nothing to do with the product's market price, and depends on the product's ability to satisfy his or her needs or requirements.

By relisting the vast majority of attractive and revealing item sets at specific price points I am creating a perceived value for these items.  This whole market tickles me to no end for a lot of reasons.  One thing that fascinates me is how pricing works in this market.  On the servers I pursue the transmogrification market I price my goods a little above the median price.  On both servers there are sellers who consistently set a higher price point and one that set a lower price point.  I arrived at my price points by adjusting up and down based on sale volume and quantity of gold coming back in the mail.  I want enough gold coming in to make it worth it to check the mail every 48 hours or so.  But I also want items to be cheap enough that I am not just reposting everything all the time.  On my smaller server I have found a good price point balance.  I make more than enough money to help others (I do not actually play on that server it is only an experiment) and it does not take too long to repost.  On my main server I make significantly more money, but it is taking longer and longer to clear out the inbox.  On this server I just reduced my prices this past holiday weekend.  We will see what the impact is.  

Get out there and create some perceived value in your server’s auction house, you too may make a new market.