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Author Topic: How can you possibly profit from normal trade?  (Read 15319 times)

Megas

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Re: How can you possibly profit from normal trade?
« Reply #15 on: November 13, 2014, 12:50:41 PM »

Quote
(say, a monthly fee based on quantity for storage?)
Might start visiting Corvus more often to dump spare ships and weapons at the free abandoned station (which I hope we can fix and renovate into something bigger), and store only commodities (like food) that can be sold at station for mass profit during an event.

I hope we can have our own outposts so I can have bases of my own to operate, and give the other factions a taste of their own medicine.
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Thaago

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Re: How can you possibly profit from normal trade?
« Reply #16 on: November 13, 2014, 12:59:00 PM »

Tariffs can be tough at times, but I think we should keep them and tweek other things. Reason: black market. At the moment the tariffs give a great incentive to sell to the black market, rather than just buying for rare/restricted goods.
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Megas

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Re: How can you possibly profit from normal trade?
« Reply #17 on: November 13, 2014, 01:08:01 PM »

Selling huge quantity of stuff to black market is (usually) not worth the even larger reputation hit.  I can sell a stack of fuel of less than 1000 (which pirates often need), and lose about 20 reputation with the non-pirate factions.  Chump change compared to selling thousands of some commodity elsewhere during a shortage, even with the tariff.
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Thaago

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Re: How can you possibly profit from normal trade?
« Reply #18 on: November 13, 2014, 01:17:11 PM »

Selling huge quantity of stuff to black market is (usually) not worth the even larger reputation hit.  I can sell a stack of fuel of less than 1000 (which pirates often need), and lose about 20 reputation with the non-pirate factions.  Chump change compared to selling thousands of some commodity elsewhere during a shortage, even with the tariff.

I don't recommend selling anything to pirates, ever, even on the black market (which takes less of a hit) :P. However, for trading between reputable factions, you usually only take the hit on the faction you sell to. Usually I'll pick a faction to be on the 'receiving' end of these deals, so its only their rep I have to worry about.

Useful in the early-mid game when cash is scarce, but not important in the end game at all.
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ahrenjb

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Re: How can you possibly profit from normal trade?
« Reply #19 on: November 13, 2014, 02:43:35 PM »

Maybe form a connection between tarriffs and stability, or have patrol fleets waiting at the jump points ready to scan you as soon as you enter a system, but less likely to scan you while traveling in-system. I mean, the purpose of a tarriff is to keep economy local, after all.
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Megas

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Re: How can you possibly profit from normal trade?
« Reply #20 on: November 13, 2014, 03:52:33 PM »

I do not sell to pirates for cash, I sell for experience.  I am very greedy when it comes to XP.  I can take a -20 or so hit to reputation even now and then.  I am constantly gaining reputation from hunting bounties.  Might as well not let those reputation rewards go to waste (because I am already at 100/100).
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Hotshot3434

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Re: How can you possibly profit from normal trade?
« Reply #21 on: November 13, 2014, 04:07:03 PM »

On the topic of trade, smuggling seems to be nearly impossible in the long run. My first play through of the update I was running drugs and other illegal goods under the nose of the Sindrian Diktat until my rep was low enough for the black market to not trade with me. Afterward I tried to find another faction that would tolerate my trading with no luck. I don't understand why the black market would shut out one of their biggest suppliers because their government doesn't like me.
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Aeson

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Re: How can you possibly profit from normal trade?
« Reply #22 on: November 13, 2014, 04:19:39 PM »

A 60% tax is pretty freaking brutal. Prices are already so similar most of the time that it's not really going to change anything to have a lower tariff.
Yes, a 60% tax is fairly brutal. Good thing we don't actually have a 60% tax most of the time in the game, then, isn't it?

A 30% tax adding to the purchase cost Y and a 30% tax reducing the sale price X*Y results in a tax which is always equal to 30% of the value of the goods traded, or equal to up to 30% of the total number of credits which change hands. Relative to the value of the goods, the fraction taken as tax is (0.3 + 0.3*X)*Y/((1 + X)*Y) = (0.3 + 0.3*X)/(1 + X) = 0.3; the fraction relative to the total number of credits which change hands is (0.3 + 0.3*X)*Y/((1.3 + X)*Y) = 0.3*(1 + X)/(1.3 + X), which approaches 0.3 from below as X goes to infinity. If we instead compare just to the sale value, then the fraction taken as taxes is 0.3*(1 + X)*Y/(X*Y) = 0.3*(1 + X)/X, which goes to 30% from above as X goes to infinity, and only reaches 60% when you sell for the same price as you buy; if selling at twice the purchase price, the fraction taken in tariffs is 45% of the total value of the sale.

If you would like to determine how much of the nominal net profit the taxes cost you (i.e. the difference between the listed purchase and sale prices), then you would like to use the fraction (0.3 + 0.3*X)*Y/(X*Y - Y) = 0.3*(1 + X)/(X - 1), which goes to 0.3 from above as X goes to infinity, and which goes to infinity as X approaches 1. For values of X greater than 3, this fraction is less than 0.6, while for values of X less than about 1.857, this fraction is greater than 1 (i.e. it is not possible to turn a profit if the sale price is less than 1.857 times the purchase value). For X = 8 (approximately what you'd see trading food from Eos to a world with a shortage), this fraction is about 0.386 (i.e. tariffs eat about 39% of your potential profit), while for X = 2 this fraction is about 90% of the nominal profit. This is a somewhat odd way to compute the tax rate, however, as the tax is on the value of the transaction and not on your nominal profit.

If you would instead like to compare the fraction taken as taxes to the net profit after tax but before shipping costs, then the fraction becomes 0.3*(1 + X)*Y/((0.7*X - 0.3)*Y) = 0.3*(1 + X)/(0.7*X - 0.3), which goes to 3/7 from above as X goes to infinity and goes to infinity as X approaches 3/7 from above. This fraction reaches 0.6 when X = 4, though it must be remembered that this is relative to the profit after tax; the fraction gets lower as X goes to infinity and higher as X goes to zero. This method of evaluating the tax rate is merely a curiosity and is not a useful measure.

Because the tax is on the value of the goods and not on the profit, the latter two methods of evaluating the tax rate are at best questionable and are highly dependent on the value of X. The first two methods are more appropriate for evaluating the tax rate and result in either a flat 30% tax rate (relative to the value of the goods) or a tax rate relative to the total transaction bounded between ~23% (X = 0) and 30% (X goes to infinity). The fourth method can be useful for evaluating how much of your potential profit is lost to the tariffs and for determining whether or not it's worth making a trade run for a given commodity, but is otherwise not useful for evaluating the tax rate. The fifth and final method is merely a curiosity and worthless as a practical means to evaluate the tax rate.

One additional measure would be the tariff relative to the purchase cost of the goods, which would be equal to (0.3 + 0.3*X)*100%, where X is the ratio between the sale and purchase price (i.e. if you purchase goods for Y credits per unit, you sell goods at X*Y credits per unit). This measure, as with the fifth measure given previously, is more a curiosity than a useful measure of the tariff. It is nevertheless a useful tool for creating hyperbolic statements about the magnitude of the tariff. For example, if you're selling for 8 times the purchase costs of the goods, the tariff by this measure is 270%. Just don't mention that it's 270% of the cost of purchasing the goods and only about 34% of the value you sold the goods for.

A 60% tax is pretty freaking brutal. Prices are already so similar most of the time that it's not really going to change anything to have a lower tariff.
If it would not change anything, why would you want it?
If you drop the lower tariff, trading becomes profitable (before accounting for shipping costs) at about 1.429 times the purchase cost of the goods, as opposed to becoming profitable at roughly 1.857 times the purchase cost, which means it would be considerably easier to make regular trade runs while not running at a loss, though this seems to run counter to Alex's intentions for the game. I think that the "it's not really going to change anything" is more with regards to the current prices of commodities than to anything else, as buying goods at 20 credits and selling them at 40 currently gives a net profit before shipping expenses of 2 credits per unit; with the removal of the export tariff, that would jump to 8 credits per unit, which is considerably better but still small change by comparison to trading food at shortage prices (buying food at 50 credits per unit and selling at 200 credits per unit gives a net profit before shipping expenses of 75 credits per unit on the open market, and those are not exactly the best prices I've ever seen for food; if the export tariff is dropped in this scenario, the net profit before shipping expenses becomes 90 credits per unit).

On the topic of trade, smuggling seems to be nearly impossible in the long run. My first play through of the update I was running drugs and other illegal goods under the nose of the Sindrian Diktat until my rep was low enough for the black market to not trade with me. Afterward I tried to find another faction that would tolerate my trading with no luck. I don't understand why the black market would shut out one of their biggest suppliers because their government doesn't like me.
The Black Market might not shut you out, but the docking authority would, assuming that the docking authority is relatively clean.
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SafariJohn

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Re: How can you possibly profit from normal trade?
« Reply #23 on: November 13, 2014, 06:32:01 PM »

On the topic of trade, smuggling seems to be nearly impossible in the long run. My first play through of the update I was running drugs and other illegal goods under the nose of the Sindrian Diktat until my rep was low enough for the black market to not trade with me. Afterward I tried to find another faction that would tolerate my trading with no luck. I don't understand why the black market would shut out one of their biggest suppliers because their government doesn't like me.
The Black Market might not shut you out, but the docking authority would, assuming that the docking authority is relatively clean.

Not to mention if you attract to much attention by not covering up your illegal trade no sane criminal would want to be associated with you. Buying and selling legal and illegal goods in similar quantities at a time should reduce the danger of getting closed out.
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Joush

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Re: How can you possibly profit from normal trade?
« Reply #24 on: November 13, 2014, 07:34:15 PM »

Eh, I get the idea behind the tarrifs and system as it stands, I'd just prefer that profitable, repeatable trade runs exsist but be dangerous. So either you need to go with a small fast ship that won't carry much cargo but can evade the pirate hunting packs praying on the trade route, or a fleet that can defeat the pirate attacks, with more profitable routs attracting more pirates.
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nomadic_leader

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Re: How can you possibly profit from normal trade?
« Reply #25 on: November 14, 2014, 12:09:45 AM »

Some people in the thread are saying it's a design decision so that "trade grind" isn't profitable. If so, I disagree with it.

What about the combat grind? That's boring for some people also. Starsector is a sandbox game, there should be multiple ways to play and the game shouldn't be channeling people into one or the other.

Like the decision to make ship-boarding and selective prize-taking as a means of advancement impossible. Another style of play made illegal; rather than properly balanced.

You should be able to make a profit trading as well. And combat. And smuggling. And prize-taking. The profit should be proportionate to the risk, difficulty, and expense of the each method, that's all.

-Once you get the hang of things, there's almost no risk to combat; yet you get the most reward from it.

-You get almost no reward from trading, but run a risk of having a bunch of defenseless ships plus all the supplies and fuel costs. Plus usually a few factions disliking you a lot anyway, and then you can't even land on their planets to trade. Aren't there any factions that believe in free market?

-Smuggling is the same except the reputation hits are even worse. It's smuggling-- you're supposed to not get caught, or it wouldn't be smuggling. Over the long term it's impossible to do without tonnes of factions hating you.

Maybe the developers understand this, and it's just a matter of tweaking the balance correctly. Right now smuggling and trading challenge:reward ratios are certainly out of whack.
« Last Edit: November 14, 2014, 12:17:23 AM by nomadic_leader »
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Burlap

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Re: How can you possibly profit from normal trade?
« Reply #26 on: November 15, 2014, 02:02:29 PM »

Hi all, just wanted to chime in on smuggling.

I do a lot of smuggling, but currently the game only gives little hints as to how to go about it. I actually learned most of the following on these forums and from the dev blogs.

Smuggling intending to tank your reputation isn't a good idea, you'll lose access to markets with patrols nearby (you might selectively tank a rep if you only trade at their more remote worlds). To avoid taking rep hits, you need to plan your trades around buying or offloading a decent volume of regular goods. I usually smuggle much like I would normally trade, since black market demand is the same, and honestly there doesn't seem to be much volume in illegal goods, and the price delta on drugs or organs isn't very wide (suggestion: change that!).

The method for all you aspiring smugglers is fairly simple; *any* time you purchase from the black market and do not wish to lose reputation, buy a similar volume (or value? It's unclear) of goods from the regular market before you leave. The authorities can still investigate you occasionally, but often won't even notice, and the same goes for selling. This is a neat little feature of the game that goes unsung. If you're a smuggler, come up with some excuse for visiting that planet with your conspicuously giant cargo holds.

As for how much profit you stand to make? It makes the title of this thread possible, buying low and selling high essentially works (but is slowish), if you keep an eye out for trade disruptions though... You can potentially end up rolling in it, 30% of your 800% markup is a lot of money, as it happens. Sure you can only save that 30% on half of your cargo, but you can do it for minimal and occasional reputation loss. I suspect you can avoid reputation loss entirely by dropping your black market value a little below 25%, but I don't really care about being slightly disliked.

I'm sort of questioning if this is actually smuggling though. It *does* destabilize the worlds you deliver to a bit, and so I like to roam the whole map to give worlds a rest, but it's not really *smuggling* if I never have to use stealth, and my path to a higher profit is to have bigger cargo holds (and bigger ships) rather than finding sweet deals on highly illegal goods, and sneaking them past the fuzz. The "legitimate business" method of evading most of the reputation hit is great though, and I think it should stay (but be explained to players in-game somehow).

Please excuse my giant firstpost rant :P
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Aeson

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Re: How can you possibly profit from normal trade?
« Reply #27 on: November 15, 2014, 03:54:26 PM »

I'm sort of questioning if this is actually smuggling though. It *does* destabilize the worlds you deliver to a bit, and so I like to roam the whole map to give worlds a rest, but it's not really *smuggling* if I never have to use stealth, and my path to a higher profit is to have bigger cargo holds (and bigger ships) rather than finding sweet deals on highly illegal goods, and sneaking them past the fuzz. The "legitimate business" method of evading most of the reputation hit is great though, and I think it should stay (but be explained to players in-game somehow).
"Using stealth" is not a requirement of smuggling. Transporting goods in a manner which violates the local customs laws is, and since you do not pay the tariffs on the goods you trade on the black market, there's a very good chance that those goods are transported into or out of the country illegally. I would also suggest that using any of the freighters with the Shielded Cargo Holds hullmod is an attempt at smuggling, as it is an attempt to conceal the type and value of the cargo from customs inspections by local patrol vessels. The goods in question do not even need to be illegal in nature, merely imported or exported improperly.

I would further suggest that operating a legitimate trading business as a cover for your smuggling operations is a form of stealth, as it is an attempt to conceal your illegal activities. If I'm making two million credits annually illegally and I have no or very little legal income, it's quite noticeable that I'm living well beyond my declared means, which is likely to lead to investigation for tax evasion and will likely draw attention at the customs stations since I'm piloting a ship along known trade lanes at times when it's clearly very profitable to be a trader. It's also quite suspicious if I pull up to Volturn during a food shortage with a fleet of Atlases and declare no cargo whatsoever despite having Eos as my point of departure, purchase no commodities during my stay, and somehow leave with hundreds of thousands of credits added to my bank account or with a few brand new ships after thousands of cargo units of food appear on the black market. Covering that with legal trade makes the smuggling activity less apparent. The apparent difference between an income of two million credits a year and four million credits per year is much less than the apparent difference between an annual income of two million credits and no income at all, and it's less obviously my smuggling activity which is at fault when food appears on the black market after my fleet of Atlases just out of Eos arrived at Volturn if I've just sold a lot of food on the open market - after all, it could be the local merchants taking some of that food I just sold them and selling it on the black market to evade whatever the local taxes happen to be, perhaps avoiding a sales tax or reducing the known value of their inventory, or perhaps as a way to reduce the income they need to report to the local government's tax agency.
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RawCode

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Re: How can you possibly profit from normal trade?
« Reply #28 on: November 15, 2014, 09:11:40 PM »

Trade grind is not profitable.
Event grind is boring and frustrating.
Combat grind feature absurd droprates of supply and money, as long as you not dealing with entire enemy fleet with single lowtech destroyer and take no damage in process, loot wont cover CR recovery cost.

There are tolls and tarifs at same time, just imagine that someone ask you payment in order to enter some a shop, still charge money for goods in shop and then ask payment for leaving shop with goods you just purchased.
Taking money 3 times for same item as result...logical - no, fun - no, allow different actions - single time per run, then you will be banned for smuggling....

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Histidine

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Re: How can you possibly profit from normal trade?
« Reply #29 on: November 15, 2014, 09:37:51 PM »

There are tolls and tarifs at same time, just imagine that someone ask you payment in order to enter some a shop, still charge money for goods in shop and then ask payment for leaving shop with goods you just purchased.
Welcome to Crapsack World, Starsector edition.

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Kickback
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In some cases, the kickback takes the form of a "cut of the action," and can be so well known as to be common knowledge—and even become part of a nation's culture. For example, in Indonesia, President Suharto was publicly known as "Mr. Twenty-Five Percent" because he required that all major contracts throughout the nation provide him with 25 percent of the income before he would approve the contract.

(also, getting tolled twice in a row is hardly that common)
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