Profit Account for August 2011

August has been a less active month for me (as I suspect it has been for most players in the northern hemisphere), but not a less profitable one. In addition to flying more conservatively and (with one exception) more sensibly, I was fortunate enough to recover modules and salvage on all my losses, which helped minimize my monthly expenditure. 

It's worth remembering that this approach to piracy was inspired by Kishin's blog, which is very much worth checking out if you have any interest in the financial side of piracy, or sustainable pvp generally. I am happy to take suggestions about the kind of data I should be looking for, as well as ways of presenting that data.

Finally, for those interested in a comparison, last month's figures can be found here.

Schedule of Income

Solo Income

Dropped modules and other loot

ISK 68,587,658

Ransoms

Nil

Total Solo Income

ISK 68,587,658

Group Income

Dropped modules and other loot

ISK 110,758,750

Loot split from Assault Ship roam in July (ISK 69,508,750)

Vengeance et alia v Curse loot split (ISK 5,500,000)

Vengeance et alia v Hyperion (ISK 4,600,000)
Vengeance et alia v Jaguar & Ishkur (ISK 24,250,000)
Vengeance et alia v Typhoon (ISK 5,000,000)
Vengeance et alia v Hurricane (ISK 1,900,000)

Ransoms

Nil

Total Group Income

ISK 110,758,750

Total Income

ISK 179,346,408

Schedule of Expenses

Solo Expenses

Reasonable losses (see note 1)

ISK 15,179,174

Vengeance (ISK 7,679,174) - Vengeance v Wolf; awesome fight. Mods recovered.
Capsule with two +2 implants (ISK 7,500,000)

Avoidable losses (see note 2)

Nil

Total Solo Expenses

ISK 15,179,174

Group Expenses

Reasonable losses (see note 1)

ISK 9,600,979

Vengeance (ISK 9,600,979) - Vengeance v Harbinger & Navy Stabber; was acting as bait and could not hold out until the cavalry arrived. Mods recovered.

Avoidable losses (see note 2)

ISK 6,574,660

Malediction (ISK 6,574,660) - Tuskers v Stone Circle & Back to Yarr. Death via station guns. Mods recovered.

Total Group Expenses

ISK 16,175,639 

Total Expenses

ISK 31,354,813

Schedule of Profit (Loss)

Total Income

ISK 179,346,408

Less

Total Expenses

ISK 31,354,813

Net Profit (Loss) (see note 3)

ISK 147,991,595

Appendix 1: Estimated Income Pending

Tuskers v Stone Circle & Back to Yarr (Tengu) loot split

ISK ??,???,???

Unsold solo roam loot

ISK 5,000,000

Total Income Pending 

ISK 5,000,000

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

Despite less time online, I actually turned a higher profit - almost seven times last month's profit, in fact. Before I get too excited, however, it's worth observing that roughly half my profit for the month was an unpaid loot split carried over from July.

I've immediately rolled my profit into another batch of Vengeances and mods; to just have the money sitting there would temp me to do something stupid, like buy expensive implants or a faction ship. Instead, it has been well and safely invested (insofar as anything invested in pvp can be called "safe").

Of course, there is a limit to how many Vengeances one pilot needs, so if next month is this profitable, I make no promises...

Income

This month, solo roaming generated about 38% of my total income, which is consistent with last month's figures. However, if I correct for the Assault Ship roam (which was earned in July, though paid in August) that proportion jumps to 62%!

It's also quite interesting that August did not generate even a single ISK in ransoms (there was one joke ransom, but I did not include this in the accounts).

Expenses

While my income numbers in the same ballpark as last month, I had far few losses, and therefore lower expenses. This is in line with the goal I set myself last month of reducing unnecessary losses, but the cynic in me suggests that I simply did not have enough play time to lose many ships.

Unlike last month, my one really stupid mistake (the avoidable loss) occured during a group action (I'll be posting about it later). While I am more "on my toes" in a group, and wild ideas are subject to a sober second thought, group actions can also be far more complicated, and I really fell down on this one. Fortunately, nobody else paid the price for my idiocy - something I don't have to worry about when flying solo.

Improving Profitability

Last month I set myself some goals for improving profitability. It's time to review those.

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.

There was a sharp reduction in avoidable losses in August, so I think I've met this goal. Of course, this is an improvement I need to maintain if I hope to remain profitable.

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.

I did embrace group activities, and I did use (and lose) a fleet tackler, so goal achieved. However, this months numbers do not show a huge uptick in group income, so I'm hardly about to abandon solo work in favour of group roams at this stage.