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Economics of Trading 101 – Part 1

The truth is, before we can talk about the economics of trading, we need to talk about why you trade. There are two main reasons people trade games (or any other bartering for that matter), and the two reasons really have the same parts, but the focus on which parts matter the most is what differentiates them. The first kind of trader is the economic trader, someone who’s trying to get the most amount of games he can with the resources he has. This person will generally be aware of the discount bins, Black Friday sales, free shipping thresholds, and when it comes to trading, they treat their games as a resource that needs to be maximized. The second kind of trader is the convenience trader, far more focused on the fact that he/she simply has a large pile of games that are just taking up space and not being useful, and they are simply interested in getting rid of them in the easiest and most friction less way possible, and are just happy to be getting something in return. Neither approach is right or wrong they are both completely valid.

Think about it; while at first glance it would seem the economical trader is maximizing his resources to the best of his ability, more often than not so is the convenience trader, as he/she is also trying to maximize their time, which is just as much of a resource that needs to be handled efficiently. The main factors here are the value of time, as well as the perception of what trading is. The value of time is easy enough to understand; if John Doe the gamer makes $100 an hour as a lawyer working 75 hours a week (and yes, lawyers play games…I’ve met my fair share), then it simply doesn’t make sense for John to spend 30 extra minutes haggling on a trade in order to get an extra $15 edge, since those 30 minutes are worth $50!!! And for those really paying attention, yes I didn’t account for taxes in that….but nevertheless $50 before taxes is still worth more than $15, and if it’s not, then stop reading this article and find yourself a better accountant. So for John, the most efficient use of his time is to throw out an offer that he knows will be accepted, and to not waste any time haggling. So what if his unplayed Caverna only gets him Ticket to Ride in return?  It only took him 5 minutes to get that trade which makes it a far more worthwhile trade then trading Caverna for Robinson Crusoe but spending 30 minutes to get that done.

The second reason time matters though, comes down to what your perception of trading is. The hardest parts of negotiating a trade are getting an answer in the first place (mandatory plug here – we respond to ALL trade offers, regardless of whether we think a trade will occur based on the offer…that includes you offering Fluxx for our Antiquity, although spoiler alert that we will likely decline that trade politely), and negotiating once you have a responsive party. To avoid the friction on that first part, there’s a few things you can do. The easiest is that once you establish a few trades, always try to trade first with people you’ve dealt with before, since they have a track record with you. Don’t forget to start your communication off with “Hey, remember me?” or some such introduction. Even if you just got lucky the first time and that person does actually ignore offers usually, most people are far less likely to ignore someone who they have a relationship with, even if that relationship is just a previous transaction. After that you can try paying attention to people who display the “I respond to all trade offers” geekbadge (if you’re on the geek that is).  And here’s a link to the 184 people at the time of this writing, that have that badge:

And as before, start a conversation along the lines of “I see you have the respond to all trade offers badge. That’s so awesome!” or some variation. Someone may have bought the badge with the best of intentions only to have life get busy….but seeing that in the message is enough to get some guilt going before he’s even seen your offer. After that the only things left to do are to pay attention to a users trade count, feedback count, and last login date. The higher the trades/feedback and the more recent the login, the better your chances.

Once you have someone you’re talking to, then the next step is negotiating, which some view as work, and some view as a game in itself. Going back to John and his $100 an hour job (good for you John!), for John to come home and add more work to his 75 hour workweek, is just not worth it. But if John views negotiating as a game, in which getting the best possible value is “winning”, then spending 30 minutes to get that extra $10-$20 edge isn’t inefficient, it’s just fun! And while to someone reading this who doesn’t like negotiating, that idea might be strange…trust me when I tell you that a good half of the people we trade with, enjoy the back and forth.

So those are the aspects that determine the type of trader you are, and how the economics of trading apply to you, so if you are someone with a lot of disposable income and you don’t enjoy the negotiating process, then the most efficient way to trade is to find people who respond, and throw offers you know are likely to stick. On the other hand, if you’re not like John for either of those reasons, then stay tuned for part 2, where we’ll start to dive into how you can get the best trade with what you have!