Tech 2 BPO Returns
Posted: 2012-03-08 Filed under: eveonline, industry, market | Tags: bpo, invention, t2 16 CommentsStirring the Hornet’s Nest
The allure of Tech2 BPOs is high and the history surrounding them is very controversial. If you don’t believe me, perform a search on the forums and you will feast on delicious tears. Industry people have been forum raging about this topic since the introduction and CCP has not dared to make any adjustments to them.
Short refresher for non-industrialists: T2 items are manufactured from an invented blueprint copy that, based on success, comes from a copy of the T1 BPO + datacores + sometimes a decryptor to modify attributes of the end T2 BPC.
Owning a T2 BPO means you can bypass the invention process and manufacture with solely the T2 BPO that has unlimited runs.
Why the bitching? The majority of forum posts about T2 BPOs complain that the individuals who won them during the lottery phase print ISK.
Yes, they were very lucky and didn’t have to put down multiple billions for the BPO. Yes, they had a monopoly on T2 production. Had. The invention system, which was introduced after the lottery system, allows many people to participate in the T2 process. More competition, lower prices.
What’s the allure? For you PVP people, think of a T2 BPOs as a Titan — a giant prize that you can show off, protect, and use to enhance your infamy. When I first started getting into industry in 2008, I thought these were the win button of Eve.
Now the only way to get one is to buy one from another player, which brings me to my research. I want to show everyone that even though they do make money, the return on the investment is very poor in the majority of cases.
The Research
Below is a list of T2 BPOs that have sold on the public Eve Online forums. I used a market program to figure out the yearly profit and divided that by the sold cost to get a return.
Though you may be drawn in by the yearly profit numbers, consider the amount of ISK used to achieve that number.
A few of the BPOs seem to have a reasonable return and might even be a slightly reasonable investment if you can keep it producing 24×7. It looks like some Ammo, Mining Crystals, and Torpedo BPOs will start to turn you a profit beyond the original investment in 2-3 years. I would definitively stay away from the 5+ year items as I think a change to the invention, research, or nerfing of the T2 BPOs will most likely happen soon(tm).
A Loss?
Yes, I have found that a few (maybe 3-4%) of T2 BPOs return a loss. The ability of players to out manufacture with the Invention process sinks the profits below that of a researched T2 BPO. Keep in mind that if you own a T2 BPO, you only produce one item. During the build phase you can’t do anything else with the BPO.
The beauty of the invention framework is that you can be more flexible and can react to changing market conditions. The drawback is that there is an increase in the complexity to produce an item.
Better Methods
If you have piles of cash and want to sit idle in a manufacturing station making sure your T2 BPO is constantly in production, you might want to consider buying some. For the average industry person or corporation, it is a very poor investment.
To compare performance numbers, I am making around 8 B a month turning over 31 B. A T2 BPO, equal to around the same amount of capital, will make you 3.5-7 B a year.
Not a solid investment in my book. Put your money elsewhere.
Rage Against the Machine
I haven’t seen an idea to resolve the imbalance that I have liked yet. More on this later.
It does seem that the market impact isn’t as big as the hype indicates according to CCP Diagoras.
[update] April 4 2012
The Good
93.95% of T2 Gyrostabilizers produced in March 2012 were from invention.
In March 2012, 90.23% of Hulks and 84.17% of Mackinaws produced were from invention.
89.77% of 1400mm II, 82.00% of Tachyon II, 87.34% of 425mm Rail II, 74.23% of Torpedo Launcher II produced in March were from invention.
55.25% of Improved Cloaks and 91.93% of Covert Ops Cloaks were produced via invention in March 2012.
86.81% of 220mm Vulcan Autocannons produced in March were produced through invention.
The Eh
67.85% of Sabres and 65.01% of Wolves produced in March 2012 were the from invention.
72.27% of the 2,005 Falcons produced in March 2012 were produced through invention.
66.13% of Ishtars and 63.53% of Zealots produced in March 2012 were produced via invention.
The Ugly
27.60% of Curses and 22.16% of Pilgrims produced in March 2012 were from invention.
Only 7.07% of Absolutions and 23.62% of Sleipnirs produced in March 2012 were produced through invention.
44.58% of Cerberus and 6.00% of Eagles produced in March 2012 were procuded through invention.
tl;dr
Post lottery, T2 BPOs do make very passive income for a very large price. For the time it takes to get a return on your investment, the capital could better be spent in other areas.
k162space 
8b a month? Shit the bed. I am doing EVE wrong. I thought incursions were good ISK…
There’s a guy in TEST who solos incursions with 10 tengus. he makes 6Bil / day easily.
Hi there, I’m one of those who don’t like T2 BPOs at all. Your research is very solid and you are absolutely right.
Buying one now is very risky because there may be changes soon. They will most likely change short after you bought one. So you will loose money.
And yes, with the invention you are far more flexible and you can produce a lot of stuff instead of 1 or 2 items. And you can produce parallel since you more often than not get more inventions through than you can build things.
And the argument that T2 BPOs destroy the prices is most of the time void too. maybe in the cases of mining crystals it is true but more often demand is much higher than the bpo owner can produce.
So buying a T2 bpo now is a risky investment. But that is exactly the point I get mad about T2 bpos 😉
You can’t buy them reasonably or only with a large stack of money to spend on. If you do so, you make someone else very happy and very rich.
So the bpos aren’t really flowing in the market. There are some rare cases to buy them but thats not reasonable movement.
And now comes the point I’m really annoyed about:
The one who already has the bpo is getting a lot of money no matter if he decides to sell the bpo or build from it. The default modules are soled something around (just a wild guess) 10% over production price from Invention. The inventor makes a bit money with selling it and thats fine.
The BPO owner builds the same item without the +50% waste factor the inventor hast to invest. That means his production cost is about 30% lower than that of the inventor. Even if prices for the module he has are low, he will most likely still make money with it.
Once the prices are low, inventors will stop producing this item and price will go up again since as i stated before the T2 owner cant sustain the demand. But during that time, he will still be making a gain of 25-30% per module if he don’t dumps the price even lower.
There aren’t really many modules out there to invent where you have 20% gain over a long time. The bpo owner has it, no matter how bad market is.
Your negative profit conculsion is bogus, sure, one manufacturing slot can’t compete with multiple slots, but just because your first slot is permarunning a T2 BPO doesn’t mean that your other production slots are sitting idle.
I was going to post something here but Chanina, covered my points very nicely (and without rage, which is something I may not have been able to do).
I understand their reason for existence, Eve is full of legacy systems, mechanics and examples. But this is not a dreadnought in hi sec mining veldspar. These have a very real effect on game play today.
As for your numbers I do wonder if there are enough ships actually moving in the market for some of your numbers. Lacheis, huginn and harpy all spring to my mind as well volume moving poor ships (but I may well be wrong on that)
Sorry, it’s just false to say that some t2 BPOs are running at a loss because of invention. Even a non researched BPO will have a lower build cost than the equivalent invention BPC. It doesn’t matter how many people build stuff via invention, a BPO job will ALWAYS turn more profit per unit, and will still turn a profit in some instances when inventon won’t
The reason some of these things sell at a loss is a combinaton of people not knowing how to calculate profit margins correctly for invention, combined with a desire to build the cool stuff (ie ships). So they often end up missing the fact they’re running at a loss or simply don’t care
you could run a bpo at 100% production, but if your not selling 100% then well its a waste of a slot you could be using to build something else.
there’s numerous items in eve that fail to sell in any significant volume. so you have wasted capital in a expensive bpo, that could have been better spent in something else.
also lack of flexibility kinda sucks,
t2 ammo bpo’s would potentially be worthwhile, even for fitting out an alliance ammo dump.
also t2 drones, would be nice to have for a major producer, but you can still be out produced by a single dedicated drone inventor.
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I Have noted that all of the costings of BPOs to BPCs have not tacken in that a BPO can be copyed and the run the copes to us all of your slots. This then gives you the best of both worlds. you would never build from a BPO T2 or T1 when you can copy it and build from that.
Copies take time to make. Currently longer than the manufacturing time, i.e. to create 9 copies takes longer than manufacturing 9 items.
The summer expansion will change this, though copying still won’t be instantaneous.
I posted this in the comments for the new Researching Dev Blog
https://forums.eveonline.com/default.aspx?g=posts&m=4531725#post4531725
Balancing Tech II BPO vs Invention of Tech II BPC
I have a concept for removing the advantage of owning a Tech II BPO without removing Tech II BPO’s from the game
I have never done any invention in my life I have no idea of the variable costs of inventing but just seeing all the complaints about how owners of Tech II BPO’s have the advantage I thought the following might balance them out:
1. Make copy time of a Tech II BPO = to Invention time of a Tech II BPC
2. Make cost of copying Tech II BPO = to cost of Inventing a Tech II BPC (I know variable costs, how do you work this?)
3. Make Tech II BPO’s Copy Only (No longer usable for manufacturing, only used to create copy’s)
p.s. I have no idea how complex this would be to code but hopefully it’s something for the Devs to consider
I see a lot of people on here largely ignorant of T2 BPO. It’s ok, we understand it’s not your fault since you probably don’t own one.
1) most T2 BPO owners do not run manufacturing 24/7. Those that say they do are full of it.
2) The impact on the market isn’t nearly what you think. The value of a T2 BPO is directly related to the usefulness of the item (i.e. the volume of units demanded by the EvE community), as well as the number of ships that can use the item AND the amount of materials required for production. For example, covert ops cloak is pretty valuable since a wide variety of ships can use them and relatively few BPO’s got into the hands of a VARIETY of individuals. The starting cost for a budding industrialist to invent cover ops cloaks is pretty high – consider the cost of a cloaking device BPO. They also tend to be used in high risk endeavors too, so players are more likely to lose one. Some T2 BPO are worthless due to in game changes (Omber crystal T2 anyone)?
3) If the loss/usage rate doesn’t exceed production rate, or at least keep up with it, then eventually a surplus is created. It’s one of the reasons why I don’t produce 24-7. It ties up capital and lowers the per unit cost, and hence margin available for the item.
4) most items are not the mad capital farms they are made to be. For example, even low impact (easier) T2 BPO production typically takes some units that you will be unlikely to supply easily yourself. The T2 BPO I have requires a unit of robotics. Doesn’t sound like much, but that single unit of PI adds 100k to the cost of the item (25-30%). Due to the nature of the PI, it’s not exactly simple to constantly make Tier 3 PI items, so I typically acquire from elsewhere. I can’t control or affect that cost. It’s simply passed on to others.
5) improved loot drops (talk about something that NEEDS a nerf) and survival of items from destroyed ships really eat in to T2 production. If you blow something up, and happen to salvage a module that might cost $400k to build, as a looter you can sell the same item for $200k and make more profit than the person building the T2 items! Talk about ridiculous.
6) in order to make reasonable profits with your T2 items, you tend to need to distribute the item yourself OR sell in such volumes that you can make up that margin difference. In my case, even with a TE of 20, I can’t make more than 80 items per day. Distribution with just your own characters is very time consuming, and a lot riskier but the ONLY way to max profits. Even then, you’ll be amazed how many times you find the item you make in some backwater system.
7) the “lottery” system wasn’t exactly work free – especially to those of us that invested huge amounts of time running missions in risky 0.0 systems to even get a chance to win a partially random BPO (you could only control the type of research you did – which restricted your BPO). And you believe yourself “wronged” because you joined EvE after 2012? Please. With that attitude someone in EvE will always have more than you. I joined in 2004 and I know lots of people with BILLIONS more than I have that started way later. Isk isn’t an “I win button” in game either. Sure it gives you the freedom to play how you wish, but no, it doesn’t really do much else. You, like everyone else is limited by the amount of time you have to play. If you’re in your 20’s you can likely spend all weekend making isk. Try being in your 50’s with only a few hours a week to spare. Guess what? The 20 year old ends up with more buying power because they can invest the time. Because of how and when I can play, I have about 10B in assets, but only a few hundred million in liquid isk.