If you have ever followed WoW token prices, you may have noticed that the gold you receive (or have to pay) can vary dramatically over time. In a previous article, we found an example of the price changing by 14,000 gold within one day! If you missed it, check it out: WoW token price analysis.
But why does the gold price change so much?
According to the original announcement from Blizzard, “the gold value of a Token [is] determined dynamically based on supply and demand. When you put a Token up for sale, you’ll be quoted the amount of gold you’ll receive upon a successful sale.”
There are some players who believe that Blizzard has a more active role in setting the price. Unfortunately, we don’t have the details about how the price is determined. For this article, we will take Blizzard at face value and assume it is set only by supply and demand.
What does it mean to be determined by supply and demand? In this article, we will take a quick look at the economics of WoW tokens and demonstrate how changes in supply and demand impact the price. To do this, we will use the traditional graphs used in economics. They are super simple but should help clarify how price changes work.
WoW Token Demand
Demand is how badly players want to buy tokens with in-game gold. If they want to buy a lot of tokens, we could say the demand is high. When they don’t want to buy many tokens, the demand is low.
If the gold price of a token is high, buyers will want to buy fewer tokens. But, it the gold price is low, players will want to buy more.
If we graph this out, it looks something like this:
WoW Token Supply
Supply is the number of tokens that players want to sell on the auction house. Since players use real money to purchase the token in the first place, they want to make a good amount of in-game gold for their investment.
If the in-game gold price is high, players will want to sell (supply) more tokens. But, if the price is low, they will want to sell fewer tokens because it is not as good of a trade.
If we graph this out, it looks something like this:
Combining supply and demand
The graphs above show that sellers (supply) want to have high in-game gold prices but buyers (demand) want lower prices. If we graph both lines on the same chart, we can see the supply and demand at the same time.
The point where the lines cross is where we would expect the auction house price to be. In the following example, the supply and demand lines meet around 150k gold.
Why do WoW token prices change?
When the demand or supply for tokens change, it causes the lines on the graph to shift. As an example, if the demand rises, the blue line will shift to the right. This will change the crossing point of the lines. The result in this case is a crossing point at a higher price.
Let’s look at a few possible examples of a change supply and demand and why they might happen:
1. More demand to buy tokens with gold (result: price up)
- New WoW content is being released (like an expansion); players want to buy more game time or items with Blizzard balance.
- New content in another Blizzard game is being released; players want to use in-game gold to get Blizzard balance to spend in other games.
- Seasonal changes; holidays with more time for players to play.
- Players become wealthier in the game, find ways to make gold easily. An example of this was the follower missions in Legion which gave significant amounts of gold and drove the cost up.
Why the price increases:
- Demand is growing faster than supply; more players are buying tokens with gold than those who are using real money to sell tokens.
2. Less Demand to buy tokens with gold (result: price down)
- Players feel there is not enough new content to continue buying subscriptions with gold.
- Other games are released which compete with time players are playing World of Warcraft.
- Seasonal, not many holidays; school is in session.
- Players have a difficult time making the gold required to buy a token.
Why the price drops:
- Demand is shrinking faster than supply; less players are buying tokens with gold than those who are using real money to sell tokens.
3. More supply of tokens to sell (result: price down)
- Release of new raid tier: players want more gold to buy potions, feasts, BoE gear.
- New expansion release; players looking to save gold for the new content
- Players want gold expensive items like the Brutosaur mount in Battle for Azeroth.
- Players with limited time to farm want gold now; supply tends to increase on weekends.
Why the price goes down:
- Supply is increasing faster than demand; more people selling tokens than those buying with in-game gold.
4. Less supply of tokens for sell (result: price up)
- End of the raid tier, players don’t need the in-game gold for pots, gear, or other supplies.
- Several months since a new patch/expansion release; players not as anxious to get gold in-game.
- Middle of the week (Thursday especially); not as many players on as reset day or weekends.
Why the price goes up:
- Supply is shrinking faster than demand; more people are buying tokens with gold than those who are using real money to sell tokens.
Final Thoughts and Takeaway
WoW token prices can change a lot from day to day, and even within the same day. Their price is determined by the combination of supply and demand. Demand is how much players want to purchase tokens with gold, while supply describes the number of tokens for sale on the auction house. When the demand goes up, the price does as well. A drop in demand will lower prices. For supply, it is the opposite. Supply going up means a drop in price while lower supply means higher prices.
Thanks for reading!