Market Talk: Understanding the FW Income Changes

I'm not sure what possessed me to write more math, but here it is.

I wrote a while ago about some math relating to the upcoming Faction War payout changes. I thought I’d clarify a few things, break a few things down into smaller chunks, as well as address several concerns that people have had.

The LP Store

There are two types of items in the LP store. There are those that require LP and ISK, and there are those that require LP and some sort of item.

Merchandise that requires ISK, currently has both variable LP and variable ISK requirements. The higher the warzone control tier, the lower the LP and ISK cost. (Implants, Datacores, etc.)

Merchandise that requires an item, currently has a variable LP cost and a fixed requirement. You cannot provide half, or a quarter of an item. (Cap Boosters, Ammunition, Charges, etc.) The item’s average price might fluctuate, but that is ultimately based on outside influences outside the scope of this discussion, and not on an explicit price cut via a FW game mechanic. (The LP store does not require you to provide half a ship, for example.)

Generic Item X and Base LP per Hour

For the purposes of this scenario, we will completely ignore any speculation, assumptions, and etc. and do a straight up comparison of Inferno mechanics with Retribution mechanics, using Generic Item X.

Generic Item X has an average market price of 100 million ISK, and a base cost in the LP store of 50,000 LP. In addition, it requires either 50 million ISK, or an item that is valued at 50 million ISK. We will perform separate calculations for variable ISK and fixed item type.

The hard numbers are not important. We’re more interested in comparing the Expansions, therefore any Item with any values can be used, so long as you use the same base for all your calculations. (For example, whether the numbers come out 50 and 100 or 250 and 500, all we care is that one is twice as much as the other. We don’t really care about the actual values, since we’re not using a real-world item.)

We’re arbitrarily choosing a base LP per Hour of 50,000 LP. (We don’t really care how much people actually make. For the sake of comparing Inferno to Retribution we just need a base number.)

Fixed Factors

(If you’re already familiar with the current and proposed game mechanic numbers, you can skip this section.)

Inferno

In Inferno, we have LP store scaling and LP payout scaling. The store scaling scales the LP AND the ISK Base Requirements, but not a fixed item requirement.

Store Scaling:
Tier 1 - 1.00
Tier 2 – 2.00
Tier 3 - 1.00 (Base Value)
Tier 4 – 0.50
Tier 5 – 0.25

Payout Scaling:
Tier 1 – 1.00 (Base Value)
Tier 2 – 1.05
Tier 3 – 1.10
Tier 4 – 1.15
Tier 5 – 1.20

Retribution

In Retribution, we will have payout scaling, but not store scaling. All prices and requirements in the store will remain at BASE value, with the LP payouts fluctuating based on your Tier level.

Payout Scaling:
Tier 1 – 0.50
Tier 2 – 1.00 (Base)
Tier 3 – 2.00
Tier 4 – 2.50
Tier 5 – 3.00

Calculating and Comparing

The math at this point is pretty easy. I will give the basic formulas of how each is found, but we don’t really care about the actual numbers, so I will not go into those details much.

LP/Hour

To find the LP made per hour, you will multiply your base (I’ve chosen 50,000) by the payout scale factor for the Expansion you are looking at.

So, LP per hour in Inferno at Tier 4 is 50,000 X 1.10. (Base plus a 10% bonus.)
LP per hour in Retribution at Tier 3 is 50,000 X 2.00 (Double your base)

ISK/LP

Another important calculation we need to make is the value of the LP in terms of ISK. Again, we are completely stripping out any speculation, so we don’t care about item sell price fluctuations, mineral prices affecting required store item prices, prices tanking due to market dumping, or the million other factors that could affect things. (We can talk about that in a different post.) We’re just looking at the straight up comparison based on one fixed base number.

Since in Inferno our warzone Tier affects the cost of items in the LP store, our ISK/LP varies based on which Tier you are at. However, in Retribution, this is not the case since the items in the store will always cost the same.

Inferno

To find the ISK/LP, you will first need to figure out your costs at each Tier. To do this, you will multiply your base cost by the Store Scaling factor we listed above. (To calculate this with a variable ISK cost, you would also multiple the base ISK cost by the same factor.)

Therefore, the ‘cost’ of Generic Item X at Tier 4 (variable ISK) would be 50,000 LP X 0.50 + 50,000,000 ISK X 0.50 which would result in 25,000 LP and 25 Million ISK. (Or 25,000 LP and 50 Million ISK for fixed item cost.)

To find your ISK/LP, you simply subtract the ISK/Fixed Item cost from the item’s Base Average market price, and then divide by the LP cost.

Therefore, the ISK/LP of Generic Item X at Tier 4 would be:
(100,000,000-25,000,000)/25,000 = 3,000 ISK/LP

Retribution

Since Retribution doesn’t have any store cost scaling, we have one value for ISK/LP for every Tier.

Average Market Price minus ISK/Fixed Item Cost all divided by LP cost:
(100,000,000-50,000,000)/50,000 = 1,000 ISK/LP.

ISK/Hour

This is the calculation we’re particularly interested in, because these numbers will allow us to compare Inferno income with Retribution income.

To calculate this, simply multiple your ISK/LP result by your LP/Hour result, for whatever Expansion and Tier lvl you are looking at.

If we calculate ISK/Hour this way for Inferno (Variable ISK), Inferno (Fixed Item), and Retribution, we can plot the following graph:

What the Graph Means (and what it doesn’t)

I chose to move away from line graphs, since we don’t really care about what happens ‘between’ Tiers. You either have the Tier or you don’t, and you don’t get different benefits for being half-way to one tier or another.

(Note, the reason the blue bar on Tier 1 falls below the others, is because a negative income was produced in this instance.)

Any time your Retribution bar is higher than either of your Inferno bars, this means that the income in Retribution at that tier is greater. If the Retribution bar is shorter, it means that the income is less at that level.

As you can see, income at Tier 5 is significantly reduced, especially for items based on variable ISK amounts. At Tier 4, it depends on your item type. (Variable ISK or Fixed Item) All other tiers are seeing a significant increase in income in Retribution.

This second graph shows a comparison of average income. (Average across all five Tiers) As you can see, the average income in Retribution is lower than both Inferno averages, though the difference between Retribution and Inferno – Fixed Item is very small.

This third graph shows the average worth of LP.

Conclusions:

• From a purely mechanics standpoint, The Retribution 'nerf' is not extremely significant. (Though it is still a nerf.)
• However, from a real-world standpoint, considering that most people have been cashing out at Tier 5, it will be a significant nerf to the current FW population’s income.
• The ‘cap’ or maximum amount of ISK/HR you can make at peak conditions will be significantly less. However, the maximum amount of ISK/HR you can make under the worst conditions will be more.
• LP after Retribution will be worth less ISK, though more of it will be generated.
• What are your conclusions?

Further Reading:
"The Math Behind Faction War 3.0"
"FW Fix and the future of highsec missioning" (Gevlon)
"Sunset" (Riperd Teg)
"FW Changes" (CCP Ytterbium talks about Possible FW changes)