clarkyltd
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Post by clarkyltd on Nov 3, 2020 11:42:16 GMT
Due to the current imbalance towards the Aerospace, it was requested to decrease the margins further to make the profits in this industry more in-line with other industries in the game. The game modeling is skewed towards giving more generous margins to products that have a) more expensive production/retail buildings b) more complex pipeline - which is desired. However, my goal is to decrease this advantage a bit. (I am okay with AS being the most profitable industry, just not by such a large margin as it is now)
Furthermore, reducing AS margins will push buyout prices for products at the beginning of the pipeline down as well. Since the mining/electronics pipeline is shared with other industries, lower input prices will have secondary effect of increasing the margins for electronics and car producers.
Based on my extensive modeling and tweaking complexity bonus for the whole economy, here are the proposed updates, assuming normal economy:
Food: tiny profit margin increase
Clothing: no change
Luxury watch: $6 margin decrease
Necklace: $3 margin increase
Electronics: average of $8 margin decrease
Cars: $40 to $80 margin decrease
SOR: $3k margin decrease
BFR: $27k margin decrease
Jumbo jet: $5k margin decrease
Luxury jet: $1,500 margin decrease
SEP: $850 margin decrase
Satellite: $1,000 decrease
Note: Aero research valuation will have to be updated in line with the SOR/BFR change to keep it similarly profitable.
The proposed changes are not final and I invite comments. However, I expect well worded arguments with modeling behind it. Comments like: "This will make fuses unprofitable" will be dismissed right away. I spent a lot of time on modeling and would expect the same on your side. Feel free to use the forum, or PM me with a link to the forum post.
Provided we do not end up doing substantial changes to the proposed, I want to get this live at the end of November.
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clarkyltd
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Post by clarkyltd on Nov 3, 2020 11:42:36 GMT
My thoughts: 1) The proposed AS mini-nerf is the correct thing to do. 2) The assumption that the raw/intermediate products will reduce in price is baseless, without a change to either the chance of finding a reasonable abundance OR an increase in the productivity of mines/rigs (meaning the same profit per hour but a lower selling price) the prices are unlikely to come down, if they do happen to come down people will leave as they are not profitable enough for the effort required to find the raw materials. 3) The points raised in #2 along with the small reduction in automotive retail prices will only serve to further weaken the automotive sector.
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Post by maximumindustries on Nov 3, 2020 19:28:21 GMT
Hi Clarky,
Thanks for the detailed thoughts, it would be helpful to generate comment if you would include some of your modeling results, instead of only the conclusions. edit: I thought that was your post, not a copy from the announcement
The reality is, there are two control points in the game: raw production costs, and retail demand - the entire economic model is based on those, and the goal is to simulate elastic demand with occasionally shifting static demands. The changes you have suggested are a tweak to one end of that spectrum, but do not appear to address the underlying issues of imbalance.
The imbalance in aerospace is not because of the prices, it's because if you have 1,000 people or 100,000 people selling finished goods at retail, the demand from consumers (per sales office) does not change. If you wanted to truly balance the retail space, there should be a dynamic demand set by the in-game population (total number of employees in the game, not players). This should apply to everything from shoes, to phones, to laptops, to oranges.
Playing out the proposed changes above, if the population of people selling in aerospace doubled, the demand would double - and, if half of the aerospace players left the game because of a nerf, then demand would fall by half also. By making the demand linked to population, it ensures that players are constantly driven to seek out opportunities wherever they emerge, rather that concentrating at the top-end of a single industry.
---------------- Expanding edit: - If there is only one player that's grocery primary, they should be earning substantial profits. - we should be rewarding players with outsized profits for finding and exploiting a niche in the economy. We should be building an economy that is dynamic, such that new niches open every day. - we should not be punishing players who have identified and are exploiting a niche by imposing a tax on those players. - I agree, the game should change, but the change the game needs isn't a nerf of aerospace retail, what it needs is an economy where diverse strategies can thrive.
In summary, start with the goal: What is the vision we are trying to accomplish When building strategies we focus on our SWOTs, strengths weaknesses, opportunities and threats: Let's not build the future out of weakness and fear, but from strength and opportunity.
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clarkyltd
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Post by clarkyltd on Nov 3, 2020 20:01:35 GMT
Id love to be able to do complex modelling but alas I cannot.
My thoughts surround the words of Patrik,
By reducing the pricing in the sales office this makes it less attractive to players and should help diversify things -> this is a good thing.
The flip side of the argument he has raised is that reduced demand will cause prices of raw and intermediate goods to fall which in turn will help industries that share components with AS, in my mind this is a bad thing, it will hit the raw and intermediate suppliers who aren't making mega-bucks.
My suggestion is to nerf AS as Patrik has suggested but also provide an increase to the production of raw materials which should allow lower pricing whist not unduly punishing those companies, in the interest of fairness to the players affected outside of the AS upper supply chain.
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Post by patrik on Nov 4, 2020 8:07:55 GMT
I am pretty sure the raw materials prices will drop, since I know they have been lower before AS was introduced.
The AS had an effect of pulling prices up for the mining pipeline which further negatively affected cars and electro.
This will not happen on the day one, but will propagate thru the usual market demand/supply forces.
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clarkyltd
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Post by clarkyltd on Nov 4, 2020 8:44:08 GMT
Morning Patrik,
Do you think the current price of raw materials is too high given the effort required to prospect them and the diminishing returns over time?
It does seem like AS (including myself) will take a bit of a loss BUT those lower down in the supply chain will take a proportionately larger loss of income (%) if prices do fall as you have suggested? Is this the intended outcome?
Thanks
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Post by wallmart on Nov 4, 2020 9:48:03 GMT
Is AS more profitable? Yes. The information, which is easy to see, growth in CV and just the list of top-100 players seems to suggest that.
But, there is more to this story than meets the eye: • Self-selection bias: The savvy and more active players will quickly identify that this is an area full of opportunity. These players would have gotten above average profit (relative to industry) just because they would make better decisions (expand or invest in research, Issue bonds or not) and hustle more to get an edge. My view is that this explains a lot of the ‘high’ profit. I personally, grew fast by doing the same. I am not saying that non-AS folks are not savvy and active (A few plank folks are definitely very active and savvy). But the averages or the distribution will support my view. • More profitable?: Most AS products are less profitable on a % margin basis than most other products. The situation is even more dire at lower margins. • Per hour profit: Yes, AS products tend to be more profitable per hour. But, we seem to be missing some key points here. o The high profit comes from a lot of work (selling anything is more difficult and buying is even more difficult). Low margin means that cash management is a big problem, even for someone of my size. Try to run a 48 hour Seps run on a level 8 Hangar. Just the fuses will bankrupt most of us. If the goal is to get profit to be same as folks who login once a day and set up production, it is a sure way to kill the game. o The profit comes only with a lot of research investment. o The profit comes with building a network. As of now, in the current market, I am struggling to make over 1 mill per day of profit from my CV approaching 300 mill.
In terms of impact, this will be absorbed by the market. The resilience in the market is awesome. But, it will backfire in a lot of fun ways: • AS players are struggling, even now. Most of my suppliers find it difficult to manage the cash flow, the supply etc. With more pressure, I expect a decent number of them to switch or leave. • All supply industries will suffer (oil, Aluminium, Electronics etc.). While car and electronics industries might consider this a good thing, AS also helps build out these supply industries by making them lucrative and getting players to focus on that. • Construction, without the AS profit, the ongoing cash flow will shrink. • Input products, the price drops only when the # of AS companies goes down. That sounds like a bad end result.
Maybe, this will be good. But, before making a change because something is profitable, do check why the industry is profitable.
Wall Mart Inc
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zyz
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Post by zyz on Nov 6, 2020 20:56:29 GMT
I very much dislike proposed changes: (also i agrred with all point Wallmart has made)
1. It punishes people who already invested into AS line and AS research - if they were about to move to another industry they would have to build quality again. 2. As is already struggling due to high competition. I had to build my own SOs to help with cash flow. 3. The problem with car or electronics being less profitable is due to the fact the retails is much much more slower than production. Retails was quicker then retailer could sell more and also buy more - that would also increase price of finished good due to higher demand and thus allow producers to make more cash. 4. The problem with mining is due to the fact that abundance is random. Lets face you need to have 95%+ to be competetive and don't have to replace mine for a while but to do so you basically need to hit 3% dice roll which on average would take 30 tries. That means that you on average need to spend 5+ days for single mine to be useful (and not counting upgrades) and as we know time is money. If propesed changes would cause raw materials to be cheaper then it would be catastrophic to the mining industry and as result would be bad to electronic and car industry as well.
I would rather see: - overall buff to the retail beside AS - remodeling abudance mechanic - in competetive game (as many player see this game) you don't want a dice roll mechanic. Also aquiring mine is time consuming and you need to replace it after some time as well. As Wallmart wrote profits are dimishing very quickly.
I also see very high difference between theoretical split of AS products per BFR vs practical one based on 160 orders. There is way too few BFR orders - that made BFR price dropped so much due to low demand and reducing it y further 27k would make end game most complex product almost worthless to make.
theoretical / practical 160 orders SEP 25,36 / 45,42857143 SAT 15,5 / 28,85714286 SOR 7,12 / 16 LUX 10,47 / 18,28571429 JUMBO 3,65 / 4,142857143 BFR 1 / 1
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pese
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Post by pese on Nov 7, 2020 17:39:31 GMT
Hi guys, perfectly agree with points made above. Especially to point two made by clark: My thoughts: 1) The proposed AS mini-nerf is the correct thing to do. 2) The assumption that the raw/intermediate products will reduce in price is baseless, without a change to either the chance of finding a reasonable abundance OR an increase in the productivity of mines/rigs (meaning the same profit per hour but a lower selling price) the prices are unlikely to come down, if they do happen to come down people will leave as they are not profitable enough for the effort required to find the raw materials.3) The points raised in #2 along with the small reduction in automotive retail prices will only serve to further weaken the automotive sector. As also stated in my thread about the reduction of automotive margin (https://simcompanies.proboards.com/thread/568/why-reduce-automotive-margin) I have the same conclusion and I am worried that this is a non-verified assumption that could negatively impact the overall economics of the game. The planned reduction of automation margins will reduce the profit to level to 0 for most automotive endproducts. Automotive companies will need to pray that the projected and non-verified assumption that players shift to the resource business, leading to falling resource prices will really happen. As long as AS stays the most profitable industry there will be no shift away from AS by logical players. Therefore the resource prices will not fall after the margin reduction and even if they fall they will benefit AS as well as automotive. In worst case scenario: - AS remains the most profitable industry.
- Automotive looses more margin (in %) than AS. Players may even shift from automotive to AS.
- The resource price doesnt change.
In the simulation I hope there were multiple scenarios, one with a shift away from AS, without a shift from AS and a shift away from automotive.
Thank you & BR PE
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Post by crownindustries on Nov 9, 2020 4:52:01 GMT
People have started leaving the game because of this nerf as they have heavily invested in infrastructure. They can't easily move to another industry e.g if someone has huge amount in automotive industry and this nerf would decrease their profit which would lead to them leaving the game . Like the example of SEPS above you need a lot of cash flow to operate and so you should have profit like......... Just my opinion, I am a newbie
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Post by dynowings on Nov 9, 2020 10:27:03 GMT
While I can't comment on the Hangar side of AS, I am familiar with the VIF side, so I'll be sticking to that to hopefully get my point across. First, let me say that I'm for an AS nerf, and the only main concerns I have over this adjustment are the changes made to the other industries, primarily the Auto industry.
Theoretically (and who knows, I might be off the mark here):
1) If the SO retail prices decrease, a decrease in the number of people with SOs will occur, as they will no longer be able to make the profit that they once did. So the question becomes: Where do these people move to? While some might quit the game, I would argue that the vast majority of them will turn to Automotive, as that is seen as the current #2 sales industry currently. The problem here is that, due to their sales bonus, they cannot easily become producers (unless they are willing to pay SimBoosts).
2) This will lead to a drop in AS producers revenue, as now the market will be saturated and demand will have dropped. Again, one could expect that they will transfer to where they have seen a spike in prices (ie. auto, where a bunch of companies just set up shop). The only issue with that is that Auto already has a low margin and this proposed update would reduce it by another $40-80 (Like, the notion that you make more profit doing everything but assembling the car itself).
Above is my current excel doc concerning the exchange retail price of SORs/BFRs. (All inputs are q2, and you can ignore the ASR profit margin stuff). The main point I'd like to draw attention to is the center column where it shows the cost to produce SORs/BFRs from exchange prices, with Sor currently at 119k and BFRs at 924k. If SORs experienced a decrease in demand, price would drop, making them barely profitable to produce (until producers dropped out of the market as well). So that's largely irrelevant. What concerns me is the BFR price: it's already a loss. Current market price for q4 BFR is ~900k (I've spoken with Whitehawk a considerable amount about this since I can't wrap my head around how his profit margins work). He basically said that only way he makes it work is by having set up some insane contracts and use of vertical integration (and I know that he's clearly making a profit as he keeps jumping in ranks).
The reason I use BFRs as an example is because they compete with Auto over aluminium and steel. If the number of auto retailers/producers goes up, the amount of aluminium consumed will also increase (BFRs - 1510, cars 30-32; scale is different though, as many more cars are produced per hour). Obviously, while a large part of the BFR is Fuse/RF cost and those 2 materials are solely for the AS sales pipeline, the competition in the other 'shared' goods will further compete over the cost to produce a BFR, likely increasing the current cost to produce. Maybe this can be offset by a decrease in price from the fuselage/RF side, but I find that unlikely, as mentioned above in previous posts, finding a good oil rig/mine takes an insane amount of patience. And even now, aluminium has been steadily increasing in price over the past 2 weeks, starting at just below $20 from when we left boom to ~$21 now weeks into normal.
While I like the idea of changing the weight of the standard distribution curve for abundance checks, I am uncertain if this is a logical solution. Unlike the previous 'great AS change of June,' the consequences of this change are much more subtle as not just the AS pipeline is effected.
As a result, while I like the AS changes, I'm largely uncertain about the other industry changes (primarily Auto, as addressed).
Dyno Wings - (And anyone feel free to PM me in game over this).
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zyz
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Post by zyz on Nov 9, 2020 18:49:35 GMT
I did math and:
I have 32 levels of sales office and i am using 33 lvl of other buildings to support them.
Now i noted all my orders (208) and average profit per order was 49 798,56. Now if we consider that order takes 48h to make that would mean 1 037,47 per hour per level. However i am using 33 levels to support my 32 Sos so 1 037,47*32/(32+33)= 510,75 per level per hour. Now it may seems high but assuming the same executives and adm, power at 0.25 and oil rig at 95% you can make 1 crude oil 22,77$ with production of 42,87 units per hour. One oil now sells at 33 (32 contract) and that is giving like 403$ per hour per level. Of course thats lower but consider that this is only 1 product and requires only 1 reserach. I to support my SOs on this level of profit had to level quality of 20 products so i consider higher profit as a reward for my hard work.
Now from my 208 orders split is: (average per order)
SEP 1,905660377 SAT 1,226415094 SOR 0,679245283 LUX 0,816037736 JUMBO 0,212264151 BFR 0,037735849
You can do the math and see that nerfs would make average profit lesser by 8188,2$. Now implementing that to formula above would mean my profit of 426.7$ per level per hour. Comparing it to 403$ per level per hour for crude oil only which is much simplier production line does not seem right - it does not reward player enough for hard work. Already orders like even 3 lux only can generate loss (in my case -19250$), nerfing it further will make orders generating loss appear more frequently which will be depressing for the players.
Also im againts nerfs because i already invested over 200 milion $ into AS research and build whole infrastructe for it and now i feel like being punished for making optimal choice at that time.
If nerfs hit in proposed form i will probably quit game for good.
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Post by Mercedes on Nov 9, 2020 21:12:04 GMT
Reading all this, I am getting the impression that we are discussing the wrong question. Why do we need a "dictator" who defines retail prices or margins? Should we not leave this to the market? Of course we need a sort of consumer demand modeling, but nothing more complex than a standard demand curve per product, scaled by the total number of players (or better: active building levels). The more units of a product are sold in retail, the lower the retail price will be. Every player who is moving over to the currently most profitable product will contribute to decrease the profitability of this product, until we have an equilibrium. (Of course, pork cycles will occur.) We should even come to an equilibrium that takes player efforts into account, as a part of the players will prefer a simpler business model with good profit over a time consuming business model with top profit. Is the any major flaw in my idea?
Edit: I think that maximumindustries had the same basic idea.
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Post by AG Forumer Inc. on Nov 9, 2020 23:17:00 GMT
There is already a consumer demand model, where the more an item type is sold in retail (at least non-SO), the lower the demand, and the lower the selling speed is. However, the demand doesn't seem to do anything about the industry tiers, so I'd be OK with making the demand model more impactful. I don't know if demand still affects SO prices (they did before demand started affecting frequency), but if it doesn't, perhaps it should. Last time I checked, aerospace end products have very low demand by the model, so making demand affect SO prices would have a net effect of nerfing aerospace.
tl;dr Mercedes and maximumindustries are proposing a system that already exists but could use a boost and/or an application to sales offices.
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Now that I've pointed out the existence of a demand model, I'll address the automotive nerf that's included in the proposed changes. As someone who has done cars earlier this year and has noticed calls for buffing cars (Patrik has said no to buffing because he doesn't want players growing too quickly), I initially found the idea counter-intuitive, but then I did some analysis to see if it was as big as the aerospace nerf, and I found that the following price reductions would pretty much cancel out the car (and electronic) nerf:
- $0.2 off silicon - $0.3 off chemicals - $0.5 off steel - $1 off aluminum
I then applied those reductions as well as $1 off methane, $1.5 off crude oil, and $150 off golden bars and figured out the profit/unit reductions for each aerospace end product starting from the outsourcing of silicon, chemicals, steel, aluminum, methane, crude oil, and golden bars. I found that the net loss of profit/unit was 13k for BFRs, over 1k for SORs and jumbos, and 100-350 for the rest. Some checking on the SO simulator revealed that such a hit would be meaningful, and zyz's numbers appear to be plausible, though crude oil would lose $60-70 profit/hr/lvl if my assumption is correct, so there would still be a complexity reward if the profit loss from the nerf was shared among the different parts of the pipeline.
All that being said, I don't think I was making more than $400 profit/hr/lvl when doing cars with vertical integration (i.e. I mostly made my own intermediate products), so I don't think cars need a nerf, as their current state would still be (a little) behind the proposed new state of aerospace.
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Post by migroup on Nov 10, 2020 0:32:43 GMT
Everytime there is a change to AS there are loads of AS players that complain about it, sadly that will always be the case. I can see Patrik is trying to address a clear imbalance, where AS is so OP that everyone is magnetically drawn towards AS. This negatively affects the feasability and fun of playing in other industries. People keep complaining about how expensive inputs are, but this is partially because no one wants to make the inputs themselves. Many outsource everything in a bid to make as many end products as possible with a low margin. The changes to AS should theoretically cause people to leave AS, thus reducing the excessive demand on the inputs. These producers will then have to sell at a lower price, which will make other industries more viable. Of course Patrik has done extensive sim run throughs to simulate what would happen, so my theory is just a guess, he has data of how it should play out.
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