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PostPosted: Jan 05 2006 
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Lieutenant

Joined: Jan 05 2006
Posts: 63
Hello everyone, I've read some quite complex questions on these boards but my question is a relatively simple one.

I've only just started playing the game properly so still have a lot to learn. Slowly getting to grips with it thanks to these very helpful forums.

I'm wondering about setting my domestic prices, should I be aiming for these to be lower than the World Market price or doesn't it matter?

I was just worried that if the world market price was cheaper then people may get angry (or try to purchase it elsewhere..)

Also which goods affect DAR? I am under the impression that having cheap agri,water and oil will have a positive affect on your approval rating.
Thanks


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PostPosted: Jan 05 2006 
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General

Joined: Feb 14 2004
Posts: 1271
Location: New York
World/foreign prices are irrelevant to your consumers. They buy from you, and you can charge whatever you like.


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PostPosted: Jan 06 2006 
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General

Joined: Dec 22 2004
Posts: 1444
Location: Holland
Bateman1982 wrote:
Also which goods affect DAR? I am under the impression that having cheap agri,water and oil will have a positive affect on your approval rating.


Also timber,power and consumer goods.
If your domestic prices becomes to high you will recieve a mail from your minister.And then its up to you for agrement or not....

_________________
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PostPosted: Jan 09 2006 
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Lieutenant

Joined: Jan 05 2006
Posts: 63
Arrg, economics is frying my feeble brain. I'm posting this question here as there is nobody suitable in my house to discuss this with.

While playing around with domestic pricing, I was wondering if its better to set your domestic prices to just above the world market price (providing you can satisfy the demand).
By doing this you would maximise the amount of material you sell at above world market price.

If you have a higher domestic markup, you will be exporting more goods i.e. selling it at a price just lower than the WM price.

So.. to sell max number of goods above WM price you should set your domestic prices to just higher than WM price.

Is this thinking flawed?

I suspect that I am overlooking something vital here


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PostPosted: Jan 09 2006 
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General

Joined: Feb 14 2004
Posts: 1271
Location: New York
World Market prices have nothing to do with domestic prices. With different GDP/c for each region, you may have the relative cost of a commodity be very cheap in one region, and very expensive in another--your people don't care about that, it's all a matter of what your own domestic market thinks is a reasonable price. Setting markup low might increase demand, but pay no attention to the WM price beyond covering your costs.

DAR will suffer if prices are very high, but I'd be very surprised if the game tracked other regions' prices and influenced your DAR in that way.

If you want to maximize your income, it's pretty simple. First, is the final price to the consumer higher or lower than what it can be sold for on the market? If it is higher, then maximize domestic demand (affluent regions). If it is lower, then maximize exports (poor regions). That should generally work, though I think Increase/Decrease Domestic Demand priorities could have the minister change your markup.


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PostPosted: Jan 09 2006 
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Brigadier Gen.

Joined: Aug 10 2005
Posts: 576
Location: Venice - the Doge's palace on the Pacific.
...Domestic markup is (IMO) best used to manage demand. The efficency slider is probably the best way to adjust the amount of profit that you make from your domestic sales at the acceptable demand level.

In other words - don't worry about the domestic price per se - look at the demand and how you are filling it - now and in the future. Fulfillment of demand is (IMO) at least as important as price as DAR is concerned.

How much profit should you make on a given industry? Well, in the early phases of the game, at least as much as is needed to pay for the additional facilities you may have to build to meet growing demand.

_________________
Colorless green ideas sleep furiously [but otherwise, they do not worry and are happy].


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 Post subject:
PostPosted: Jan 09 2006 
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Lieutenant

Joined: Jan 05 2006
Posts: 63
In my current game I am playing on the British Isles map as Wales.
My oil production capacity is about 750 000.
If I set my markup to 22%, the domestic selling price is equal to the WM price and oil demand is still only about 400 000.

From a profit perspective (ignoring DAR), I guess that I don't want to reduce markup by any more.
Or should I continue reducing the markup until demand approaches my capacity?

I'm assuming that the maximum price I could export oil for is approximately equal to the WM price (or slightly less), as why would anyone buy my oil when they could purchase it from the WM cheaper?

I'm in the process of experimenting with this but am just wondering if anybody knows these things..


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 Post subject:
PostPosted: Jan 09 2006 
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General

Joined: Feb 14 2004
Posts: 1271
Location: New York
I think you are misunderstanding domestic markup. It affects only your domestic market (to your consumers) prices, not your world market (to other regions) prices.

You want to watch your 'cost per unit' for commodities. These are your total costs, and anything above that figure is profit. Say there's a commodity at $80 cost, $100 WM price, and 200% domestic markup. Your minister will sell this commodity for $99 to other regions on the world market, and $300 to your own people on the domestic market. In either case, you are making a profit and are okay.


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 Post subject:
PostPosted: Jan 10 2006 
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Lieutenant

Joined: Jan 05 2006
Posts: 63
red wrote:
Say there's a commodity at $80 cost, $100 WM price

OK. I will pick these numbers for simplicity.

1)In this case say if I set my markup so the domestic cost is $150, assume demand is then 1000 for arguments sake. I will then sell 1000 units at $150, and another unknown number will be exported at $99.

2)If I set my markup so that domestic cost is $101, demand is higher e.g. 1400. So I am now selling more material at above WM price.

I will still export the same amount of material to the WM at a price of $99 so this factor contributes the same amount to my profit as in 1)

Just wondering if you end up with a larger domestic sales profit by following case 2)
I suppose it depends on how much more demand you get by decreasing the prices.
Will have to do some calculations later...


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 Post subject:
PostPosted: Jan 10 2006 
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Colonel

Joined: May 28 2005
Posts: 388
Quote:
1)In this case say if I set my markup so the domestic cost is $150, assume demand is then 1000 for arguments sake. I will then sell 1000 units at $150, and another unknown number will be exported at $99.


Correct, all surplus goods not sold to ur own pop will be exported, how much that is depends on how much ur own pop consumes and how much u produce.

Quote:
2)If I set my markup so that domestic cost is $101, demand is higher e.g. 1400. So I am now selling more material at above WM price.


Maybe, it's not for sure that the demand will grow higher to 1400, this depends on alot of different factors. But in general, if u lower the price, more goods will be sold, however it is not sure if u will make more profit.

Also u must note that while u decreased ur own price u, u increased ur own consumption and that automatictly leads to less export, wich means less export income :-)

There is no perfect balance in the game, it all depends on how u want to rule ur own region :D


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 Post subject:
PostPosted: Jan 10 2006 
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Lieutenant

Joined: Jan 05 2006
Posts: 63
Thanks for the responses. I just ran a small experiment over a few days game time.

Situation 1 I set my oil domestic markup to 22% and this netted me a domestic oil profit of $25.8million.

Situation 2 I set my oil domestic markup to 39% which obviously reduced demand, but gave me a domestic oil profit of $27.8million.
Note amounts exported remained similar in both situations.

Only ran the trial over 10 days which I know isn't long enough for conclusive results, but for now I'd really rather be playing the game than leaving it to run for a month by itself.
Maybe I can leave it running while I'm in work, though I'd probably return home to find I'd been wiped out by my neighbours halfway through the day :o


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 Post subject:
PostPosted: Jan 10 2006 
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Brigadier Gen.

Joined: Aug 10 2005
Posts: 576
Location: Venice - the Doge's palace on the Pacific.
For the sake of 'purity' in these tests, you should set efficiency investment to 0. Turns out that the slider is a factor, not a fixed amount, and the more you produce, the more investments gets sucked into it. That amount can be seen to change daily in the slider window, but is not really itemized anywhere else.

_________________
Colorless green ideas sleep furiously [but otherwise, they do not worry and are happy].


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 Post subject:
PostPosted: Jan 15 2006 
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Brigadier Gen.
User avatar

Joined: May 27 2005
Posts: 597
Location: Netherlands
red wrote:
Say there's a commodity at $80 cost, $100 WM price, and 200% domestic markup. Your minister will sell this commodity for $99 to other regions on the world market, and $300 to your own people on the domestic market. In either case, you are making a profit and are okay.



red you made one small error here. The domestic markup is the amount of money added to the price at which a commodity is produced in your country.
So in your example it will sell at $240 not $300.

Just want to keep the figures clear to everyone :wink:


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 Post subject: Ignore World Price
PostPosted: Jan 17 2006 
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Colonel

Joined: Oct 25 2005
Posts: 344
Location: Salinas, CA
Bateman1982 wrote:
In my current game I am playing on the British Isles map as Wales.
My oil production capacity is about 750 000.
If I set my markup to 22%, the domestic selling price is equal to the WM price and oil demand is still only about 400 000.

From a profit perspective (ignoring DAR), I guess that I don't want to reduce markup by any more.
Or should I continue reducing the markup until demand approaches my capacity?

I'm assuming that the maximum price I could export oil for is approximately equal to the WM price (or slightly less), as why would anyone buy my oil when they could purchase it from the WM cheaper?

I'm in the process of experimenting with this but am just wondering if anybody knows these things..


Bateman1982,
I would suggest ignoring world market price when setting your domestic prices. It's all about demand, as Il Duce has correctly pointed out. If you want to get your demand to increase then decrease the domestic prices until you see demand for products go up. If you want your demand to decrease then you should increase the domestic price enough to cause demand to decrease.

It takes a bit of experimentation to get the hang of a particular region's economy. You should expect to make a few dry runs to get the hang of your economy and what you should do. How much investment in efficiency do you make to make the cost go down to make the domestic price go down?

I had been playing Southern California in the US-California scenario and had a dickens of a time getting GDP/c to increase through increasing domestic sales demand. Then after update 4 I decided to try the US in the World scenario. I was really happy to see my GDP/c go up the very first day and thought this would be a piece of cake economically speaking. After 27 days I was broke as I burnt through my $76 billion treasury really quick. I found that I had to start increasing domestic prices to quench demand, especially for consumer goods. My demand for consumer goods far outstripped my production and I wasn't able to buy from the other regions at reasonable prices. My autobuy was buying consumer goods at an exhorbitant price and I actually turned it off. I had serious shortfalls of consumer goods which makes the people unhappy.

Also look at your production and resource facilities. As one player pointed out in a post I read you don't want facilities that are at less than 10% in size/condition. It's better to trash those little facilities and upgrade other facilities to 100%. That way you keep production costs down which improves profit potential. You may also want to downsize whole industries if you have overproduction and you can't export the surplus.

The other key to economics is research as you need to spend plenty on increasing your tech level and also invest heavily in education through social services to increase your literacy rating to help increase your GDP/c. Lots of interactions between various departments means there's no one set policy to get your economy rolling.
Thanks,

Eric Larsen


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