World of Warcraft Economics or Why Tailoring Won't Make You Money

Recently I've been playing World of Warcraft. While this is mostly wasting my time, it does let me put my economics to practice due to the existence of a market economy (an auction house where players buy and sell).

One part of the game is that characters can have two main professions and build up the skill in that profession.

I have a gnome mage and I decided to be a tailor. Unfortunately tailoring has turned into a massive expense with almost zero benefits so far.

The problem is that any profession where you use raw materials to make finished products (in my case cloth armor), once you have gained the skill necessary to make the product - the major cost of production is the raw materials. Actually making the product can take 10-30 seconds. So if two players have the skill to make something, they will compete and drive the price down to a very small margin above the cost of the raw inputs.

This small margin is equal to the cost of selling the product (there is a deposit fee for auctioning an item) and a tiny reward for the effort you put into buying the raw inputs and making it.

Since there is imperfect sellers competition (as there is a limited number of players per server and most players won't bother selling goods at such a low profit), there are some cases where you can make more money than usual. However, in most cases you are better off selling the raw inputs on the market and letting other people try to make the tiny profits from the final goods.

I've only been a tailor. But this probably applies to any profession with a finished product (which is half of them).

A profession can give you the ability to produce an item for yourself that you could not otherwise buy on the market (some items are not allowed to be traded). However I haven't benefited from this.