Profit Account for July 2011

Kishin's blog has really changed the way I think about piracy. Rather than "just" being fun, it's also a business, and like any business, you can succeed at it, or you can fail. I can't think of any truer test of a pvper's skill than their ability to actually support themselves from the proceeds of their crimes.

Piracy, as a business, is more than just a series of fights. The wins and losses, individually, don't mean much. It's the profitability that makes or breaks a player's ability to focus exclusively on pvp. This, then, is the first of what will become a monthly report on my financial gains (and losses) as a pirate. I've prepared a set of accounts using the same format that a small business would use, with some modifications to reflect the realities of New Eden.

While I don't see myself changing the basic format (a formal set of accounts), the way the data is organised is very much up in the air. Whereas Kishin has broken the data down by ship type, I have tried to break the actvities into either solo or group actions, with a number of sub categories. If anyone has better ideas for organising the data, please don't hesitate to make suggestions.

Schedule of Income

Solo Income

Dropped modules and other loot

ISK 67,293,620

Ransoms

ISK 1,500,000

Tawa Suyo (ISK 1,500,000)

Total Solo Income

ISK 68,793,620

Group Income

Dropped modules and other loot

ISK 70,716,022

Bounties from Assault Ship roam (ISK 8,216,022)
Vengeance & Dramiel v Tengu & Navy Caracal (ISK 26,500,000)
Tuskers v BANE (ISK 36,000,000)

Ransoms

ISK 28,300,000

Andreas Mennon (ISK 3,300,000)
!!R4MBO!! (ISK 25,000,000)

Total Group Income

ISK 99,016,022

Total Income

ISK 167,809,642

Schedule of Expenses

Solo Expenses

Reasonable losses (see note 1)

ISK 54,349,264

Vengeance (ISK 13,587,316) - Vengeance v Cyclone; better module management would probably have allowed me to survive the fight.
Vengeance (ISK 13,587,316) - Vengeance v Thorax & Pilgrim.
Vengeance (ISK 13,587,316) - Massive gate camp. It happens.
Vengeance (ISK 13,587,316) - Vengeance v Merlin et alli.


Avoidable losses (see note 2)

ISK 40,761,948

Vengeance (ISK 13,587,316) - Wrong turn into high sec; destroyed by npcs.
Vengeance (ISK 13,587,316) - Took on destroyer under station guns; was slow to warp out.
Vengeance (ISK 13,587,316) - Misunderstood gate gun mechanics when fighting Dominix.


Total Solo Expenses

ISK 95,111,212

Group Expenses

Reasonable losses (see note 1)

ISK 37,872,666

Vengeance (ISK 13,587,316) - Vengeance lost on Anamake roam. Totally worth it.
Vengeance (ISK 13,587,316) - Death by blob.
Vengeance (ISK 10,698,034) - Tuskers v BANE. Totally worth it.


Avoidable losses (see note 2)

ISK 13,587,316

Vengeance (ISK 13,587,316) - Vengeance & Wolf v Rifter et alli. I badly mismanaged my modules and died as a result.

Total Group Expenses

ISK 51,459,982 

Total Expenses

ISK 146,571,194

Schedule of Profit (Loss)

Total Income

ISK 167,809,642

Less

Total Expenses

ISK 146,571,194

Net Profit (Loss) (see note 3)

ISK 21,238,448

Appendix 1: Estimated Income Pending

Assault Ship roam loot split

ISK 40,000,000

Unsold solo roam loot

ISK 3,000,000

Total Income Pending 

ISK 65,000,000

Appendix 2: Explanatory Notes

Accounting basis

This profit account has been prepared on the basis of income received and expenses incurred. That is, income is only recorded when the ISK has actually been deposited in my wallet and the expense of purchasing a ship is recorded only when the ship has been destroyed.

All accounts have to make decisions about when, and how, to record income, and each method has it's own advantages and disadvantages. I prefer the income received basis because it takes the guesswork out of preparation, but I recognize that this means that there will be cases where a profitable month may show a loss, simply because the bulk of the faction loot is still on contract in Jita. The reverse is also true.

However, as long as the accounts are consistent, long term trends in profitability can be reliably monitored, especially if we remain alert to the possible biases. Additionally, estimates of carried over income will appear in appendix 1.

All figures are rounded to the nearest ISK, and are derived from character and alt wallets unless otherwise stated.


Capital & Liquidity

These accounts also do not address issues of liquidity or capital. Although I may be profitable, for example, I may have no ISK in my wallet because I have converted those funds into ships and modules.

I have chosen not to address capital or liquidity for two reasons. First, this adds a great deal of additional work to the accounts, for very little additional gain. Capital and liquidity matter in the real world, where a corporation's ability to offer security for debt (capital) and meet the interest payments on that debt (liquidity) are critical issues. New Eden, mercifully, does not work like that.

Second, it would provide just a little too much information about me. If I ever have to pay a ransom, I'd really prefer that whomever is ransoming me cannot see, to the nearest ISK, how much money I have!


Notes

Note 1: "Reasonable losses" includes all losses where it was reasonable for me to engage the target and no fundamental play error occurred during the fight. Battle Clinic costs, net of insurance, are used for simplicity, and dropped modules count as destroyed for the purpose calculating these costs, unless those modules were recovered after the fight. Loot from previous fights, if any, are excluded from the total costs - no ISK was spent on obtaining these items, so no ISK is lost when they are destroyed.

Note 2: "Avoidable losses" includes all losses where it was unreasonable for me to engage the enemy or a fundamental play error occurred during combat. Battle Clinic costs, net of insurance, are used for simplicity, and dropped modules count as destroyed for the purpose calculating these costs, unless those modules were recovered after the fight. Loot from previous fights, if any, are excluded from the total costs - no ISK was spent on obtaining these items, so no ISK is lost when they are destroyed.

Note 3: In this line, a figure in brackets indicates a loss rather than a profit.

Appendix 3: Comments & Criticism

I am surprised to find myself turning a profit in my first recorded month, but, with the exception of a one week period in the second half of the month, I was profitable throughout.

Of course, profit as a concept is a relative thing. My overall gain, across a whole month, is about what a dedicated pve player will make in an hour. At the moment, at least, piracy is not a road to riches; I'm about 1 T2 frigate richer than I was at the start of the month.


Income

Interestingly, solo roaming generates about 40% of my total income. I was not expecting this, but all those modules add up to a decent profit over the course of the month. The income would be even higher if I had not managed to lose a few modules by getting blown up with loot still on board.

Of course, group roaming generates higher income, as groups are able to take on more lucrative targets. But not so much more lucrative than that it completely outshines the slow-but-steady solo roaming. This means that anyone docked up waiting for a gang to form is missing out on significant income.

Expenses

Solo work is far riskier, and hence far more expensive, than group work. No real surprise here; it's one of the reasons that bad pvpers resort to gate camps so often - it simply makes economic sense.

It's worth noting, however, that my really stupid mistakes (the avoidable losses) occur almost exclusively when I'm flying on my own. In the past I have seen Tuskers remarking that they are making poor engagement decisions, and that a roaming partner who will override their poor decisions would be appreciated. I had assumed these were purely humorous remarks, but there is clearly an element of truth in what was being said.


Improving Profitability

Breaking down the elements of my income like this should, in theory, help me come up with action plans to improve profitability. This month, I hope to do that  in the following ways:

1) Minimizing avoidable losses. This is probably the easiest (and one of the most lucrative) changes I can make to the way I pirate. Cutting out just half of these needless expenses would have more than doubled my profitability for the month, not to mention helped me feel like less of an idiot. Minimizing these losses means staying alert and maintaining target selection discipline.

2) Embrace opportunities for group work. Tuskers have formal roams only infrequently. However, we do like to gang up on above class targets. Keeping alert for these opportunities is likely to improve my profitability. Equally, putting aside a ship purpose fit for group work, (such as a fleet tackler) will improve the likelihood of the groups success, and the chances of snagging the pod. Although my interceptor skills are fairly limited I will put together a dedicated fleet tackler for group work.

While not the only ways of improving profitability, these changes should be easy to implement, and I should see immediate returns.