The easy example is to consider someone making Lignum Vitae and someone else making Hemp. Both are single-structure items, and to make the goods merely consists of making a few clicks every three days.
The Lignum maker will make 3360 Lignum a week for a cost of 706000 db
The Hemp maker will make 840 Hemp a week for a cost of 2888 db.
Let us assume there are plenty of buyers in the port of manufacture so no hauling is involved; what is a fair mark up, a fair price?
The Lignum maker isn't greedy and thinks 10% is reasonable. He sells his Lignum for 231 db and makes a weekly profit of 70160 db.
What about the Hemp maker? The same 10% mark up would mean selling Hemp at 4 db ea (ok, so this is actually 16%). His weekly profit is a mere 472 db.
Not exactly fair, is it?
So what is a fair price for Hemp? Well, this is really set by supply and demand, but what would make you think it worth making Hemp yourself?
You might think 25 db is reasonable. But this is a whopping 700% mark up. How can you possibly justify that? It just sounds so arbitrary.
Even selling at 25 db each the Hemp maker will only net 18112 db a week, approximately one quarter the profit the Lignum maker gets for doing exactly the same work.
So how do you reconcile this disparity?
What I and a number of others have done is to use the concept of doubloons per lot-hour. Everyone has 10 lots. A week has 168 hours, so everyone has exactly the same 1680 lot-hours to 'sell' each week.
All things being equal, it is reasonable for everyone to be able to make the same profit out of his or her structures, and this is set by a db per lot-hour rate.
Looking at our Lignum and Hemp makers, the Lignum cutter is selling his goods at a mark-up of 418 db per lot-hour, the Hemp grower at 108 db per lot-hour, making it very clear that the Lignum cutter is making far more profit in doubloons despite his meagre profit in terms of percentage.
Doubloons per lot hour is not everything, though. I use 200 db/lot-hour as a convenient yardstick, but I also tend have the 300 db/lot-hr and 400 db/lot-hr prices to hand. But this is for my benefit, to help me judge value for money, not as a pricing policy that everyone ought to follow.
It is in fact entirely reasonable for the Lignum cutter to want to make more profit than the Hemp grower. He has invested a considerable amount of money in his production and, as Lignum sales can be very erratic, he is likely to have even more money tied up in stockpiles or AH listings.
Iron, Brass, Black Powder and Provisioning makers can also reasonably feel they ought to make more than the Hemp cutter as they need to haul their goods, as do other people who ship their goods from the raw material port to a shipbuidling port.
Do the calculations yourself. I am lazy so I just set a few different db/lot-hr rates in the Prices sheet headings in Production Planner. Work out what prices you think reasonable for every one of your ingredients. Check the AH listings and histories to see what prices and quantities you are likely to be able to buy. And where - don't forget hauling time!
For each ingredient work out whether you are best off buying or making, then work out the structures you need.
