Monday, 16 July 2012

Hisec PI a mugs game but not why you think

There are problems with these two Hisec pictures.

Hisec Barren resources

Hisec PI Customs Tax is 10%

This Losec (0.3) Picture is much better. 

Lowsec Barren resources
However, even this tells only part of the picture: I am only paying 2% tax; something that is not achievable in hisec.

For today's discussion;
  • Total profit = (Unit sale price - Unit cost) * number of units; ignoring any other factors (including transport, equipment, piracy, processing)
  • Unit sale price is set as the average of lowest sell and highest buy of raw material prices (to keep things simple).  Pricing is a little old and a spot price i.e. subject to change.
  • Unit cost is set by the tax rate (10% in Hisec; 2% in my Losec Planet); and 
  • Number of units is set by resource availability (crudely measured with a tape held up to the screen)
Each point above could have a post about it's correct treatment (eg. I rarely sell raw mats), but too keep the wordcount down; it will do

Profit after tax for Hisec Barren Planet
1.0sec Volume Ave Price profit after 10% tax
Aqueous Liquids 6 1.45 5.70
Base Metals 9 1.10 5.40
Carbon compound 10 1.15 6.45
Micro Organisms 10 0.34 -1.65
Noble metal 3 2.82 6.96
1.37 4.57

The exact amount you extract does not matter for this argument (whether you use all or some extractor heads; whether you extract for 1 hour or 14 days); the numbers still 'wash up''; all I am looking at is the proportions and prices of items.

As you can see, on this planet in hisec, on these prices, the biggest profit is from the difficult to extract Noble Metal; followed by the easy to extract, middle priced Carbon Compound.  It is unlikely that I will be extracting and selling Micro-organisms.

Profit after tax for Lowsec Barren Planet with various tax rates
0.3 sec Volume Ave Price 17% 10% 6% 2% 0%
Aqueous Liquids 9 1.45 5.40 8.55 10.35 12.15 13.05
Base Metals 17 1.10 4.25 10.20 13.60 17.00 18.70
Carbon compound 19 1.15 5.61 12.26 16.06 19.86 21.76
Micro Organisms 17 0.34 -8.76 -2.81 0.60 4.00 5.70
Noble metal 9 2.82 17.73 20.88 22.68 24.48 25.38
average 14.2 1.37 4.85 9.82 12.66 15.50 16.92

This is a table of profits for the same items of a lowsec planet.

As you can see, at a 10% tax rate; Losec Micro Organisms are still a loss; and Noble Metals still has the best return nearly twice as good as it's nearest competitor.

In fact; at these prices; Noble Metals has the best return at any tax rate; hardest to extract but the higher price more than makes up for it.

That said; as the tax rate goes down, the gap shrinks; from about a 40% 'lead' to a 15% lead for Noble Metals over Carbon Compounds.

Finally, where tax makes a huge difference is on pure manufacture worlds.  For example I am making Integrity Response Drones on a low tax planet.  Ignoring direct component costs, and looking only at the tax rates involved.

Tech Level Total taxable value 10% 6% 2% 0%
P1 (import) 1,280 500 32,000 19,200 6,400 0
P2 (import) 40 9,000 18,000 10,800 3,600 0
P3 (import) 6 70,000 21,000 12,600 4,200 0
P4 (export) 1 1,350,000 135,000 81,000 27,000 0
Total 206,000 123,600 41,200 0

Import taxes are 1/2 that of export taxes.  As you can see; when I had my 10% highsec manufacturing planet; I was paying roughly 200K/drone in up front PI taxes; No that I have access to low tax words; this is reduced to roughly 40K/drone.

While losec planets and customs offices are in abundance; Low tax Player Owned Customs Offices (POCO) are in relatively short supply.  However, if you intend to seriously do Planetary Interaction; then organizing access to a cheaply taxed POCO is an important consideration. 

Interbus does not mind losing their NPC CO's, and at very roughly 100M Isk, they are easy enough to put up.

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