Exhausting guide to NC build/upgrade order

[mxz]

It's been talked about a lot on here, but recently I saw a forum member in game who built two Night Clubs before upgrading the first. Previously, I'd seen talk that you should upgrade your first NC to level 3 before building the second. Well, here's more than you wanted to know about why that's a poor idea...and some basic economics mixed in.

I decided to do Net Present Value and Internal Rate of Return calculations for 3 scenarios over the course of a year (365 days):
(1) Building two NCs consequtively
(2) Building one NC and upgrading it to level 2
(3) Building one NC and upgrading it to level 3

What is Net Present Value (NPV)? This basically looks at the value of money thru time. A dollar today is worth more than a dollar tomorrow because you could have invested it. When looking at personal finance you generally use the inflation rate to calculate how much your money is/was worth yesterday/today/tomorrow. Businesses use a different rate because they can invest in research/development and are expecting a certain growth rate (say, around 15%). I used a rate of 1% since that's (about) what most CC building upgrade IRRs come out to.

What is Internal Rate of Return (IRR)? This is basically a calculation of the above mentioned rate when the NPV is 0. A simple way to think about this is if we knew how much milk cost in 1975 and how much it costs now, the IRR calculation would give us the rate of inflation (because the value of milk doesn't really change - like I said, very simplified).

Why do you use both of them? NPV skews towards bigger investments (or upgrades, in our case). So a Casino's NPV will blow a Sports Bar's away... in the long term the Casino obviously makes more money so that should be easy to understand. IRR, on the other hand, can skew towards smaller investments that pay off quicker. If we looked at the Casino build vs. a Sports Bar build over 50 days the Sport's Bar's IRR would look much better. So we use the two to make sure we get the full picture.

Assumptions:*
Discount rate of 1% (like I explained in the NPV, this is *about* what we expect from a standard CC upgrade).
You could build/upgrade immediately after the previous had finished. This effectively left-shifts the graphs, but in the end it isn't a huge deal since the differences are significant.
You do no other upgrading/building after this. Essentially that just complicates things; the scope of the exercise is to look at which investment(s) you should make, first.
You're playing for the long haul...not just a month or two.

http://img208.imageshack.us/img208/1491/36750706.jpg (http://imageshack.us/photo/my-images/208/36750706.jpg/)

Looking at the IRR chart you really begin to see why going to a level 2 NC is a better investment than the other 2 options. Upgrading to 2 has the quickest positive IRR (you're making money!) and it is also the highest. Remember that we assumed we could do everything right away, so if your IPH isn't stellar (maybe >$200k/hr) the NC1/2/3 curve will be skewed to the right by maybe 20-30 days. Since building another NC and upgrading the first one to 2 are *about* the same cost, there isn't much skew, relative to each other.

As you can see from the NPV chart: building 1 NC and upgrading to level 3 right away makes you a metric ****ton of money. But also notice that even upgrading it to level 2 and stopping makes you a whole lot of money sooner than building the second NC. Remember that NPV is different than just "breaking even" - it's taking into account other upgrades you could have done with your in-game cash.

TLDR:
Once you build your first NC your goal in the game should be to get it to level 2. Once that's done build your second and upgrade it to level 2. After that, ping pong the upgrades so they're similar levels.

Edit: good suggestion from AFed.

Also worth noting that this analysis should apply to all type A buildings (modifying payout values a bit).So if you're debating any of the ultra low level buildings (House, Tattoo Parlor) or mafia required (Italian Restaurant, Movie Theatre, Loft, Night Club) this strategy applies.

[buddylee]

Thanks mxz, that's the way I'm going, but I was going off of previous posts. It's good to see the data behind it...even if I don't completely understand it.:p

[Murda]

But what about, er.....um, howeva......actually I'm just gonna have to take your word for it.

[Dravak]

But since upgrade and building are not on the same allocation slot , if cash money permits offcourse.

Upgrading a NC to 3 , while building a NC1 should return the most investment .
If money is short yes upgrading NC to 3 in the longterm yields the most profit .

But thanks for the data MXZ

[mxz]

But since upgrade and building are not on the same allocation slot , if cash money permits offcourse.Yeah I guess that's another assumption. Most people don't just build NCs because they have too much money laying around and the NC looks pretty...

[Dravak]

Well the problem is that "legitly" the building and upgrade takes a long time , so cash flow will always be short .
Unless time invested , once past the 2 million IPH cash becomes a bit none issue , just time invested and waiting time.

Should ask Plux / Nicolost they normally love these kind of discussions .
But maybe you just joined in troubled times and missed the core that likes the discuss these things
Since am more into gold for stats increase , or gambles for payoff kind of person .

[SiennaSharpe]

But what about, er.....um, howeva......actually I'm just gonna have to take your word for it.

I'm with you on that, but thanks this analysis. Half saved for my first NC!

[Sasha54]

You are correct - it is exhausting.......lol

plus I have enough work-related charts to look at so will just take your word for it - but fortunately I already followed your bottom line strategy - built the 1st and levelled it to 2 - now that was exhausting!!

I am currently building my 2nd - over 100 hours to go. But in between I just had to do other buys and uprgrades - it was ruining the game for me just to focus on these long saves and builds.

all in all - it's a good building and the benefits to me outweigh the 6 hour collect time - I get most of the money and who cares if I miss some - it's still worth it - and it's PRETTY!!

[buddylee]

I'm two days away from my first NC upgrade. I was struggling with whether I should purchase my 2nd NC or upgrade the first.

[Sasha54]

I'm two days away from my first NC upgrade. I was struggling with whether I should purchase my 2nd NC or upgrade the first.

All the advice - points to upgrading the 1st one - since you almost have the money - stick with that plan. Upgrade isn't as long as the build but don't ask me what it was.........lol

[Dwizzy]

Great post Mxz. That's one of the reasons I love this game moreso than any other iPhone game, because you can apply real world finance and investment knowledge to the game to determine the best course of action in the game. It's almost like a practice for making real life investments....almost.

[Ramshutu]

The night club 1-2 costs 50% more, but nets 100% income over the level 1 NC. In pure maths terms, there is not any debate. The only disparity is that you normally have more ability to build than upgrade. The only way building would be preferable over upgrading to 2, is if it was possible to net more per/hour gain with the 20m difference by upgrading other buildings. If this is true, which is possible due to lack of upgrade bw, you have chosen your upgrade paths poorly as you should have performed this upgrade before the level 1 NC.

[mxz]

Great post Mxz. That's one of the reasons I love this game moreso than any other iPhone game, because you can apply real world finance and investment knowledge to the game to determine the best course of action in the game. It's almost like a practice for making real life investments....almost.Sure, and if you want to get into banking or accounting this sort of exercise is pretty much the foundation of what you'll be doing. A lot of real world application in running a business, too. The nice thing about CC is that it's risk-free. :)

[mxz]

The night club 1-2 costs 50% more, but nets 100% income over the level 1 NC. In pure maths terms, there is not any debate. The only disparity is that you normally have more ability to build than upgrade. The only way building would be preferable over upgrading to 2, is if it was possible to net more per/hour gain with the 20m difference by upgrading other buildings. If this is true, which is possible due to lack of upgrade bw, you have chosen your upgrade paths poorly as you should have performed this upgrade before the level 1 NC.You mean a 200% income increase...? (577.5k-192.5k)/192.5k

The other way to look at it is one L2 NC makes 1.5 times the amount two L1s do.

[dudeman]

Nice post. Both my NCs have been at level 3 for some time now, but I got them there doing pretty much what it says in the OP.

I built the first NC, started the upgrade to level 2 and started building the second NC before the upgrade was complete. I did a cheaper upgrade (I forget what) while waiting for the second NC to finish, and when that random upgrade finished I had enough saved to do the second NC level 2 upgrade. That might be the only thing I didn't see in the OP, but I figured it made sense to upgrade that straight away instead of waste time saving another $45M for the level 3 upgrade. By the time the level 2 upgrade was done I was close enough to affording a level 3 upgrade anyways, so it worked out pretty well.

[Dwizzy]

Sure, and if you want to get into banking or accounting this sort of exercise is pretty much the foundation of what you'll be doing. A lot of real world application in running a business, too. The nice thing about CC is that it's risk-free. :)
Yeah I know. I own a small business and I'm also in grad school for MBA and an MHA and many of the things we learn usually can be applied to the game. If I were ever a finance professor I would recommend the game to my students.

[mxz]

I haven't run that scenario, but I'd guess that it's correct, Dudeman.

0>1, 1>2, 0>1, 1>2, 2>3, 2>3, and so on. After getting them to level 3 you're probably better off doing other (somewhat cheaper) upgrades (like Upscales, Lofts, Hotels, Condos maybe even Credit Agencies) while constantly stashing some money towards the mid-tier NCs.

[buddylee]

All the advice - points to upgrading the 1st one - since you almost have the money - stick with that plan. Upgrade isn't as long as the build but don't ask me what it was.........lol

lol, I think it's around 60hrs, but compared to the 143hrs I think it takes to build, it's definitely worth it. The only problem is, I don't know how many days have gone by since I had the original 40mil. I'll probably break even timewise.

[buddylee]

Nice post. Both my NCs have been at level 3 for some time now, but I got them there doing pretty much what it says in the OP.

I built the first NC, started the upgrade to level 2 and started building the second NC before the upgrade was complete. I did a cheaper upgrade (I forget what) while waiting for the second NC to finish, and when that random upgrade finished I had enough saved to do the second NC level 2 upgrade. That might be the only thing I didn't see in the OP, but I figured it made sense to upgrade that straight away instead of waste time saving another $45M for the level 3 upgrade. By the time the level 2 upgrade was done I was close enough to affording a level 3 upgrade anyways, so it worked out pretty well.

I've been following the same methodology, doing some lower level upgrades in the process, but not taking too much away from the income going towards the level 2 NC upgrade.

[Coladonato]

Great post! Working on my first NC.....wasn't sure how I was going to go about the future investments. This is very helpful! This should be added to the "Best of the Best" guides. Thank-you for taking he time to put this together.

[Polarbear]

lol, I think it's around 60hrs, but compared to the 143hrs I think it takes to build, it's definitely worth it. The only problem is, I don't know how many days have gone by since I had the original 40mil. I'll probably break even timewise.

It takes like like 2 months to break even a lvl 1 NC, and like half that time to recuperate a lvl 2 upgrade, so best to upgrade ASAP.

[AFed]

Also worth noting that this analysis should apply to all type A buildings (modifying payout values a bit).

[Polarbear]

Kudos mxz for thread!

Should also chuck in optimum income for build/upgrade.
If I remember, it was around 450kph, that you can do back to back build and upgrade to lvl2.

[dudeman]

Kudos mxz for thread!

Should also chuck in optimum income for build/upgrade.
If I remember, it was around 450kph, that you can do back to back build and upgrade to lvl2.

$400k/hr if you can rob what you don't make. :cool:

[Dreno33]

where's WF when you need him? he did different calculations. found it was actually (shockingly) better to build one and upgrade it to ten before even BUILDING the second one. it was b/c of the drastic increase of iph per NC level compared to the cheaper NC upgrades with less iph gain. he would go into more depth on it. let's see if he sees this thread

[ShawnBB]

Beautiful thread for explaining it officially.

I feel very sad that nobody around me with financial related majors playing CC.
Will finish my second lvl3 NC in a week, I'm seeing the light of 1million IpH!!

[mxz]

where's WF when you need him? he did different calculations. found it was actually (shockingly) better to build one and upgrade it to ten before even BUILDING the second one. it was b/c of the drastic increase of iph per NC level compared to the cheaper NC upgrades with less iph gain. he would go into more depth on it. let's see if he sees this threadGiven unlimited cash this makes sense. You're basically saying you don't care about IRR because you don't need the returns to reinvest - the NPV alone gives you value from the upgrades. While not trivial, you could calculate the point at which that makes the most sense by assuming a certain period, but I'm guessing it's high enough that you'd be able to build the second immediately after the first (while also upgrading the first).

[nopenopenope]

where's WF when you need him? he did different calculations. found it was actually (shockingly) better to build one and upgrade it to ten before even BUILDING the second one. it was b/c of the drastic increase of iph per NC level compared to the cheaper NC upgrades with less iph gain. he would go into more depth on it. let's see if he sees this thread

It was a thread you started...

http://www.funzio.com/forum/showthread.php?32461-Need-some-Economy-Opinions-for-lvl-9-60k-income

He didn't provide any math to backup his statement and it goes against popular opinion.
NC1->L2->NC2

[ShawnBB]

where's WF when you need him? he did different calculations. found it was actually (shockingly) better to build one and upgrade it to ten before even BUILDING the second one. it was b/c of the drastic increase of iph per NC level compared to the cheaper NC upgrades with less iph gain. he would go into more depth on it. let's see if he sees this thread

http://www.funzio.com/forum/showthread.php?38592-At-what-point-can-I-stop-obsessing-about-upgrading-NCs&p=379651#post379651
Check post #43.

[Cobra Shuttle]

So basically going two lvl 1 nightclub route gives you a quicker return on your investment, while upgrading one to lvl 3 first is the better long-term investment.

One thing that is relevant to the second scenario is the amount of money you aren't able to collect in the time while the NC is upgrading. Have you taken that into account?

[buddylee]

I was just going next in line in terms of cost for upgrade, in a round robin sort of way, but since I purchased my upscale clubs and NC, i've been focusing on those.

[mxz]

One thing that is relevant to the second scenario is the amount of money you aren't able to collect in the time while the NC is upgrading. Have you taken that into account?Over the long term this actually isn't relavent. I did take it into account, though.

Dreno,
The reason the argument for going 2>3 before building a second at level 2 doesn't logically make sense is that the output is the same ($1.155M) but the singular upgrade to level 3 costs $111M while building the second and upgrading to L2 will cost $106.8M. So it's a cheaper way to double the output of a single L2 NC.

[emcee]

I agree with OP.

BTW, one night club straight to level 10 without building the second would be suicide especially at mid to high levels.

[Ramshutu]

You mean a 200% income increase...? (577.5k-192.5k)/192.5k

The other way to look at it is one L2 NC makes 1.5 times the amount two L1s do.

The above equation gives 2 x, which is a 100% increase, or 200% of the base income. You over estimated the increase by 100%, the real value is 50% of what your saying...

At least, I'm 99% sure.

[mxz]

The above equation gives 2 x, which is a 100% increase, or 200% of the base income. You over estimated the increase by 100%, the real value is 50% of what your saying...

At least, I'm 99% sure.Haha, not quite. I discounted the value of the level 2 output by the level 1 output so the result is, in fact, a net increase rather than a simple % of the base (A-type buildings have level 2 output of 300% the base; level 3 output is 600% base {which would correspond to a 100% increase over the level 2 output}).

[Dreno33]

It was a thread you started...

http://www.funzio.com/forum/showthread.php?32461-Need-some-Economy-Opinions-for-lvl-9-60k-income

He didn't provide any math to backup his statement and it goes against popular opinion.
NC1->L2->NC2

well popular opinion has nothing to do with truth. i, no offense mxz, trust WF's opinion over this thread merely from experience in his intellect that ive witnessed. his logic makes sense and yes i have not seen actual math proof. But, for this threads sake, I have been using ROI when saving for my next NC upgrade and still it has shown that it would take less time (in the long run) to save for a lvl 2 and then lvl 3 NC upgrade before upgrading my Loft to lvl 5. I will keep using this technique for the second NC build. As long as WF's goal calculator illustrates the next best upgrade for my current un-inflated iph is a NC upgrade, then i will continue at it. I'm no genius at math but WF has proven himself to us all he is quite experienced in this field. i trust him

[Euchred]

Great thread mxz, I put my Nightclub to 3 before building #2 on my main but it was an easy task with my at the time IPH (I didn't build them till level 150). I didn't take long for me to realise the way specified here was the way to go with my camper account upgrade one to level 2 then build and upgrade the other. It at the time made sense to me because 2 level 2s are the same as one level 3 and it takes less time to get there. my camper is really close to 2 level 4s now.

[nopenopenope]

well popular opinion has nothing to do with truth. i, no offense mxz, trust WF's opinion over this thread merely from experience in his intellect that ive witnessed. his logic makes sense and yes i have not seen actual math proof. But, for this threads sake, I have been using ROI when saving for my next NC upgrade and still it has shown that it would take less time (in the long run) to save for a lvl 2 and then lvl 3 NC upgrade before upgrading my Loft to lvl 5. I will keep using this technique for the second NC build. As long as WF's goal calculator illustrates the next best upgrade for my current un-inflated iph is a NC upgrade, then i will continue at it. I'm no genius at math but WF has proven himself to us all he is quite experienced in this field. i trust himThe math has been proven in this thread. Keep believing what you want...

[ShawnBB]

well popular opinion has nothing to do with truth. i, no offense mxz, trust WF's opinion over this thread merely from experience in his intellect that ive witnessed. his logic makes sense and yes i have not seen actual math proof. But, for this threads sake, I have been using ROI when saving for my next NC upgrade and still it has shown that it would take less time (in the long run) to save for a lvl 2 and then lvl 3 NC upgrade before upgrading my Loft to lvl 5. I will keep using this technique for the second NC build. As long as WF's goal calculator illustrates the next best upgrade for my current un-inflated iph is a NC upgrade, then i will continue at it. I'm no genius at math but WF has proven himself to us all he is quite experienced in this field. i trust him

Then have you thought and calculate yourself about what whitefrog said? Even most experienced professors make mistakes regularly.

I pointed out the hiding problem of WF's goal caculator long time ago, as well as ramshutu's GFI concept for upgrading order. Their method totally mixed the upgrade time,building time and saving time together which caused a big misleading in terms of comparing high lvl NC upgrade and building the second one.

Building time-- will have a lot of on hand money for the next action after it finished.
Upgrade time-- there is a building income lost during the process(it is a major discount at high lvl NCs), will also have a lot of on hand money ready for the next action.(but not as much as building time if time cost is the same)
Saving time-- will have 0 money left after it finished. That makes it the worst time type among all three options.


If you spent 10m or higher on something, make sure that's the one gives you the most IpH raise/million. Keep upgrading in this order is the way to maximize the snow ball effect.

[mxz]

@Dreno,
Here's another projection. It shows two scenarios. The first one is taking two NCs to Level 2 and the second is taking one NC to Level 3.

What I did was assumed a (collectible) IPH of $100k/hr ($2.4m/day) and that you already had $40m stored for the first NC. On day 1 the builds begin. Since both scenarios need to get one NC to level 2 they start exactly the same and only begin to differ when the 2nd NC starts getting built on day 34.

This projection takes into account the saving time and opportunity cost of upgrading (not being able to collect).

http://img189.imageshack.us/img189/6832/nccomparison.jpg (http://imageshack.us/photo/my-images/189/nccomparison.jpg/)

You can see both IRRs approach 2.0% over the course of 365 days, but the 2xNC2 does it faster.You can also see the NPV of the 2xNC2's is higher at the end. So, according to both metrics it's a better investment.

Other assumptions:*
-No banking
-Made all collections
-Tycoon/Goodfella

Some more data:
IRR for 2xNC2's reaches 0% on day 80
IRR for 1xNC3 reaches 0% on day 85
NPV for 2xNC2's reaches $0 on day 99
NPV for 1xNC3 reaches $0 on day 105

[erik]

Great analysis. 1 to 3 and repeat, followed by alternating.

[bravo 6 vk]

Bump to the top!!!

[Ntggamer]

2014 brozz

[krimesity]

2014 brozz

Do NOT bump old threads no0b.

[Ntggamer]

It is still a good thread .-.