The key price thread

[Chief D]

The thread clearly says, "Discuss", not "harass other members of the forum". If you would like to argue with me, I'd be happy to hear it. 

 

Here's what I think is happening:

 

Listed key prices rises to, for example, 4.22. After a few days, key sellers adjust and sell for 4.33 to make profit. We notice this, raise listed key price to 4.33. And the trend continues. I'm saying, the price that people sell keys for is going to stay over the listed price. The real question is if it's going to keep increasing over 4.33 if the listed price stays at 4.22, and we really can't find out. But it seems that all of the evidence is people successfully selling for one scrap over the listed price. I could go out and find you infinite amounts of trades of people successfully selling strange for one rec over the listed price, but I don't think the value of the item is actually going up... people are just paying for the quick time they get the keys in. That's another factor for the price of an item. People can successfully sell keys for one scrap higher than the listed price because people don't want to open their own trade a wait a while for keys, they want them ASAP, so they spend an extra scrap to get them. They're not just paying for the price of the key. They're also paying for the time it takes to get it. Think about this: how hard is it to find someone selling a strange for the bp.tf listed price on outpost? Pretty hard. It's also hard to find people selling keys for the listed price, but I guarantee you they are if you open your own trade... thus not paying to get your items quickly, but taking them time and just paying for the value of an item.

 

I'd agree if they were random people buying 1-3 keys. But enough people buy enough keys to raise the avg on tf2finance. Also, it's becoming harder and harder to buy keys for the lower end of said price. 

[There]

I'd agree if they were random people buying 1-3 keys. But enough people buy enough keys to raise the avg on tf2finance. Also, it's becoming harder and harder to buy keys for the lower end of said price. 

 

Well... let me ask you this? Where are all of the keys coming from? People are selling them at 4.33, we see that (in my example), but are they just buying keys for 4.33 and selling them for 4.33? What's the point in that... no, people are selling them for a profit. They're probably buying them for 4.11 or 4.22 and selling them for more. I don't think enough people stockpile keys to sell them all at no loss. Also, to your "it's becoming harder and harder to buy keys at the end of said price." Key sells are just adjusting to the new prices. It would probably reach a level of difficulty and stop if we didn't keep suggesting. If it's easy to buy items at the low end of the spread, then the lower end of the spread is too high.

[Uranium235]

The thread clearly says, "Discuss", not "harass other members of the forum". If you would like to argue with me, I'd be happy to hear it. 

 

Here's what I think is happening:

 

[...]

 

You sure have a weird interpretation of what harassment is! But if you feel that way, I'm sorry.

 

Anyway, your opinion on what's happening is not new and it obviously is not the reason for a price trend. There have been so many discussions about that, that I don't feel the need to explain that any further.

[AwesomeMcCoolName]

Fine, solution: backpack.tf stops reporting the price of keys in refined. 

Wish: backpack.tf stops reporting the price of keys in refined.

That would end in the rich getting richer and the poor getting poorer.

 

Newer trades would sell their keys very low, while the richer (better/larger) traders would continue to raise prices. Ultimatley newer traders would be selling keys at 2 ref, while the more experienced traders would go around picking em up for 2 ref and then selling em or 4,5,6 ref. AKA, without a price guide keeping track of the price of items (especially currencies) sharking would run rampant.

[Chief D]

Well... let me ask you this? Where are all of the keys coming from? People are selling them at 4.33, we see that (in my example), but are they just buying keys for 4.33 and selling them for 4.33? What's the point in that... no, people are selling them for a profit. They're probably buying them for 4.11 or 4.22 and selling them for more. I don't think enough people stockpile keys to sell them all at no loss. Also, to your "it's becoming harder and harder to buy keys at the end of said price." Key sells are just adjusting to the new prices. It would probably reach a level of difficulty and stop if we didn't keep suggesting. If it's easy to buy items at the low end of the spread, then the lower end of the spread is too high.

It should be "common" to buy for the lower and higher end. I'm pretty sure that even without the suggestions, keys would be going up. The demand for keys is going up a lot for many reason, including steam market. I'm sure that if there's a solution, it's on valve side. As I've said countless times. I don't agree with removing key prices, but perhaps if the team thinks it's a good idea, it might be worth a try.

[AwesomeMcCoolName]

Well... let me ask you this? Where are all of the keys coming from? People are selling them at 4.33, we see that (in my example), but are they just buying keys for 4.33 and selling them for 4.33? What's the point in that... no, people are selling them for a profit. They're probably buying them for 4.11 or 4.22 and selling them for more. I don't think enough people stockpile keys to sell them all at no loss. Also, to your "it's becoming harder and harder to buy keys at the end of said price." Key sells are just adjusting to the new prices. It would probably reach a level of difficulty and stop if we didn't keep suggesting. If it's easy to buy items at the low end of the spread, then the lower end of the spread is too high.

What happens, buyers buy at 4 ref, and sell at 4.11 ref, until they can't get them at 4 ref anymore, and start buying at 4.11 ref and selling at 4.22 ref, until they can't get them at 4.11 ref anymore, and so on. So, most buyers end up breaking even every time keys go up (unless you can sell 40 keys, and buy 41 before they rise you can't make any profit in dealing with keys).

[F CHARLIE]

Base64, I was wondering if, when you feel, an opinion here or in another thread that adds to or contradicts your statement could then be added to your comment, by you only, in order to show alternate possibilities.  Your comment has become somewhat of an authoritative explanation for the key trade price increase but there are valid points made outside the document as well which detract from it.  If you were to add a statement regarding them and noting a need for further research than your comment on the event would become the complete statement on this situation.  Thanks for the consideration.

[The Killjoy]

Fine, solution: backpack.tf stops reporting the price of keys in refined. 

Wish: backpack.tf stops reporting the price of keys in refined. 

And then people use Spreadsheet and TF2Finance for their key prices

This only hurts bp.tf and helps no one

[~shenanigans]

The funny thing is, bp.tf's key prices are almost always behind tf2finance's. Suppose we remove the key listing, do you think traders won't use tf2finance? Right now, even spreadsheet has keys listed as 4.44-4.55.

 

Not providing information won't have any positive results in the long run.

[F CHARLIE]

An odd thought occurred to me, how would you know if  the mannconomy was in recession?  How would you track it or recognize it?  Is it even interesting to you? idk A brief look at the price sheet her at bp.tf shows that more items are receiving price drops then there are receiving increases but that may not mean much.

[Whitnezz]

First of all, great work. Finally a rational approach to explaining the increasing key prices. However, there're a few things I don't agree with (maybe because I just didn't understand them as I'm not a native speaker).

 

The first thing is the comparison between "Total existing Refined:Total existing keys" and the currency of the USA/Canada. It just feels to simplified to me. There's a difference between the money supply ratio and the actual exchange ratio, that sounds logical. The problem is that the strength of each currency is dictated by the market force of each country. Meaning there're two different markets. In contrast, both keys and metal belong to one market. However, both of them are used/have been used as a currency. So if there're two equal currencies in one market but a different supply it matters indeed. Therefore - in my opinion - metal shouldn't be used as a currency (or keys, but that wouldn't make any sense). Nevertheless I think you're right. I don't believe that this is the main reason for the increasing key prices.

 

I'm not entirely sure about the supply & demand part either. In the real world supply adjusts to demand which doesn't happen in the TF2 economy. On the contrary, demand is adjusted to supply. As soon as there're no keys left for 3 ref and sellers try to sell them for 3.11 ref the demand decreases and less are bought. Led by common sense the sellers would have to adjust their prices to the demand so they can eventually sell their keys (which they don't do, because they want to make profit). As There already pointed out many players get tired of waiting for the sellers to decrease their price so they're kinda like "meh, whatever" and buy a key above the market price, because it doesn't really matter to them, which I understand. You don't have to put any effort into earning a scrap. You don't have work for it or anything, like you'd have to for real money. That's one of the major differences between the TF2 economy and the real economy in my opinion. You could also say that every key owner has a monopoly, because he's in the position to demand a certain price. This is also the point where BP.tf begins to contribute to the increasing key prices. If there was a steady price of 3 ref per key, there might be people that buy for 3.11 ref, because there're many keys sold at that price. Consequently, BP.tf suggests a new, higher price for a key. So if BP.tf wouldn't do so, the sellers couldn't raise their prices, because no one would overpay by a ridiculous amount for a key.

 

Something else I don't understand is that people actually try to make profit using two different currencies. A real economy gives out a certain amount of dollars, a certain amount of quarters and so on. I mean, what would happen if people actually tried to buy a dollar for 3 quarters and sell them for 5 quarters? That's ridiculous, isn't it? 

 

Please correct me if I missed out on something essential and please excuse my English which isn't ideal for this kind of discussion :-)

[BQE]

I'm curious what would happen if, just as an experiment, for key price suggestions, outpost could only count for 1/2 of the proof.  For all other proof, you'd need a different website, a screenshot of an actual trade, or a screenshot from a trade server.  

[BQE]

What about a massive group that agrees not to buy keys for more than a set price?  

[F CHARLIE]

I'm curious what would happen if, just as an experiment, for key price suggestions, outpost could only count for 1/2 of the proof.  For all other proof, you'd need a different website, a screenshot of an actual trade, or a screenshot from a trade server.  

 

We never see anything from Bazaar or the other one.

[Uranium235]

I understand why the demand decreases. In the real world however, supply has to be adjusted to demand which doesn't happen in the TF2 economy. [...]

You could also say that every key owner has a monopoly, because he's in the position to demand a certain price. [...]

So if BP.tf wouldn't do so, the sellers couldn't raise their prices, because no one would overpay by a ridiculous amount for a key. [...]

to make profit using two different currencies [...] buy a dollar for 3 quarters and sell them for 5 quarters? That's ridiculous, isn't it?

 

The demand did not decrease. Either the supply decreased, or the demand increased, or both.

Judging by the volume of Key sales observed by tf2finance (not too much change), it looks more like the last possibility is the case to me.

 

Key owners do not have a monopoly. The Key market is more like a perfect competition where you have many sellers and many buyers. The term you are looking for is a seller's market.

 

The supplied quantity does not "have to be adjusted" for demanded quantity at a specific price, it only may be, as long as you have free production capacity.

But in a competitive seller's market (sellers have the upper hand) you generally can't simply increase production because you are already at full capacity, otherwise you would not be running an efficient business.

If the production (capacity) cannot produce enough output to satisfy the quantity demanded at a specific price, the price will rise and the quantity demanded at that new price will be lower than at the old price.

That happens until a new equilibrium, where quantity demanded equals quantity supplied at a specific price, has been found.

 

"Production capacity" for Keys in the TF2 for Metal market is limited. Only Valve can supply/produce unlimited quantities and does so at a fixed price, because they are the monopoly in the primary market.

And the demand there is the origin for the supply/production capacity in the secondary market.

 

Bp.tf has only very little to do with the price increase. It may contribute in the way that market transparency is higher and the price changes happen a little more quickly.

But claiming bp.tf stopping to report the current market conditions would stop the cycle, is absurd. To anyone still thinking that, why does it only work with Keys and not e.g. Buds for Keys, or any other item for that matter?

 

If I want to sell Keys (for a high price) and I get no adds, I reduce my price. If I sell my Keys too quickly before I can restock, I raise my price. That happens without bp.tf or any other source of price reporting.

 

Metal and Keys are not different denominations of the same currency, nor are they currencies themselves. They are more like two different goods in a barter economy. That's why any comparison with Bills, Quarters and currencies is meaningless.

[Whitnezz]

Ok, apparently it wasn't obvious that I was referring to the graphics displayed in Base's summary. I wanted to say that supply normally follows demand. Sellers seem to have quite a monopoly as they're in the position to control the market. Otherwise key prices wouldn't increase. You might call that a competitive seller's market, sorry for not using the perfect word there.

 

The statement that neither keys nor metal are used as a currency is - at least in my opinion - completely wrong. Metal, keys and earbuds are clearly the currencies. Just take a look at BP.tf's price suggestions.

 

Apart from that, you obviously missed my point completely. I wanted to express that I believe that the main cause for the increasing key prices is way simpler. As I said above, a few people relent to the seller's demand as they don't really care whether they loose a scrap or not. And that's where - in my opinion - BP.tf is to blame, at least partly, for the increasing price of keys. Every seller generally tries to sell his items at the upper end of a price suggestion or above. Even if there're a few people that buy above the market price, that's the justification for BP.tf to raise its prices, maybe just by a scrap. Consequently every seller raises his prices again.

[F CHARLIE]

What about a massive group that agrees not to buy keys for more than a set price?  

 

Group would never work.  It would hav to be nearly everyone and key resellers would still buy.  This has to be ridden out unless you can get trading sites to agree to ban anyone who sells above a certain price. Even then the sellers could go to forums.

[Chief D]

Group would never work.  It would hav to be nearly everyone and key resellers would still buy.  This has to be ridden out unless you can get trading sites to agree to ban anyone who sells above a certain price. Even then the sellers could go to forums.

 

This my friend, is price manipulation. Again, Valve has to do something.

[Chief D]

I'm curious what would happen if, just as an experiment, for key price suggestions, outpost could only count for 1/2 of the proof.  For all other proof, you'd need a different website, a screenshot of an actual trade, or a screenshot from a trade server.  

 

People who claim they can buy for less o servers and keep bitching about key suggestions, NEVER post a screenshot of a server. Only, perhaps, 1 or 2 of the trade history.

[There]

What happens, buyers buy at 4 ref, and sell at 4.11 ref, until they can't get them at 4 ref anymore, and start buying at 4.11 ref and selling at 4.22 ref, until they can't get them at 4.11 ref anymore, and so on. So, most buyers end up breaking even every time keys go up (unless you can sell 40 keys, and buy 41 before they rise you can't make any profit in dealing with keys).

 

So wrong. They will always be able to get them at 4 refined. It'll get harder, but that's because of people adjusting to the backpack.tf price. If this was so true, than the price of everything in the game would be going up. 

[F CHARLIE]

So wrong. They will always be able to get them at 4 refined. It'll get harder, but that's because of people adjusting to the backpack.tf price. If this was so true, than the price of everything in the game would be going up. 

 

Doesn't work like that.  It will actually result in price of many items coming down.

[base64]

both keys and metal belong to one market

If Keys really belong to a single market then Sellers would have accepted 111.11 Refined in place of 25 Keys, instead of requesting an overpay.

 

The production activity of mid-tier item is associated with Keys, not Refined. Meanwhile, craft Hat is associated with Refined.

 

We make millions of Strange items each year, through Keys.

 

Somone explained the situation perfectly http://forums.backpack.tf/index.php?/topic/522-keys-their-prices/&do=findComment&comment=5342

I understand why the demand decreases.

A change in Quantity Demanded is in response to a change in Price.

A change in Demand is in response ot a change in everything else, except price.

 

Demand did not decrease.

supply has to be adjusted to demand

There is no such thing. We adjust price so that Quantity Demanded = Quantity Supplied.

buy a key above the market price, because it doesn't really matter to them

Then that is exactly why the reported market price should go up. Market raises the price until it does matter to them.

So if BP.tf wouldn't do so, the sellers couldn't raise their prices

We never see that happen when we rejected a suggestion.

certain amount of dollars, a certain amount of quarters

And who said a Key "should be" equal to 2.X Refined? Is it written on the Key itself?

 

The average player in TF2 (millions of them) perceives the value of Keys as $2.49

 

and somehow, America as the center of the world gave perception that 1 Refined = USD$1

 

That's why so many angry kids say that "Price in Mann Co Store didn't change".

missed out on something essential

You missed the fact that the currency market is Free Floating.

supply normally follows demand

There is no such concept. That phrase only claims that "If someone wants something, someone will make it." and it says nothing about price.

 

It's more of a discussion similar to "which came first, the chicken or the egg?"

Sellers seem to have quite a monopoly

Monopoly only refers to ONE seller.

Oligopoly refers to SEVERAL sellers.

Collusion is among Oligopoly sellers.

 

Half of the population asking for a higher price is not Collusion.

[F CHARLIE]

This my friend, is price manipulation. Again, Valve has to do something.

 

I agree, and it wouldn't matter.  As I said, they will just go where they can to sell where they want.  My thought now is that they may be doing this to drive people to steam market or other so they can make cash on it.  I see now that keys can be gotten at steam market.  Also, there is a lot of chatter about tf2.wh having a bunch as well as other areas.  Interesting.

[Chief D]

I agree, and it wouldn't matter.  As I said, they will just go where they can to sell where they want.  My thought now is that they may be doing this to drive people to steam market or other so they can make cash on it.  I see now that keys can be gotten at steam market.  Also, there is a lot of chatter about tf2.wh having a bunch as well as other areas.  Interesting.

the fact that you can sell keys for around $2 on steam market made a HUGE difference. I used to buy games with keys/ref on outpost, with keys being around $1.30. Now the fact that keys are $2 on steam wallet and ref haven't changed, made me more interested in keys. 

[Uranium235]

The statement that neither keys nor metal are used as a currency is - at least in my opinion - completely wrong. Metal, keys and earbuds are clearly the currencies. Just take a look at BP.tf's price suggestions.

 

Apart from that, you obviously missed my point completely. I wanted to express that I believe that the main cause for the increasing key prices is way simpler. As I said above, a few people relent to the seller's demand as they don't really care whether they loose a scrap or not. And that's where - in my opinion - BP.tf is to blame, at least partly, for the increasing price of keys. Every seller generally tries to sell his items at the upper end of a price suggestion or above. Even if there're a few people that buy above the market price, that's the justification for BP.tf to raise its prices, maybe just by a scrap. Consequently every seller raises his prices again.

Concerning your statements about supply, demand and monopolies, see base64's response, with which I agree.

 

I didn't say Keys or Metal are not used like/similar to money, I said they are not a currency. Without being too technical, a currency is a sub-form of money, but needs to meet more criteria to be called as such.

Anyway, that is not so important here. The important thing is, that there is no authority (government) that declared Keys and Metal to be the money that must be accepted by all and there is no direct link between the two. Obviously nobody dictated that Keys have the same value as 3 Refined.

 

I didn't miss your point. I know what you wanted to express, but you seem to ignore my reasons, and the reasons given in base64's article, about why I, as most others btw, think it is not that simple at all.

 

Ask yourself why so many other items do not increase in price (in Metal, Keys, Buds) as fast as Keys do in Metal, even though sellers also constantly try to sell them above the reported price. If your theory was correct, shouldn't that cycle apply to every item that has a price reported here? Maybe that will help you understand.

 

It amazes me how often people coming from, and accepting and defending, capitalistic societies, wish the TF2 economy was based on communism - many of whom don't even realize that's what they wish for.