Is It Cheaper to Craft or Buy? Three Routes, One Block

A Commerce Journey — Episode 14. Real economics, measured against live Hypixel Skyblock Bazaar data.

Vertical integration is the idea that you should own the steps above and below you. Do not buy the parts, make the parts. Do not sell through a middleman, sell direct. Every margin someone else was taking becomes yours.

It is the most intuitive strategy in business and it has a long history of not working. Skyblock lets you test it properly, because the chain is short, every step is priced, and nothing is hidden.

1️⃣ The test

Pick a chain with three tiers. Raw diamond, enchanted diamond, enchanted diamond block, where each tier is 160 of the one below. There are three ways to end up holding one block.

Buy the block outright. Buy 160 enchanted diamond and compress them once. Or buy 25,600 raw diamond and compress twice, which is the fully integrated version where you own every step of the process.

If the market were efficient these three would cost about the same, with the integrated route slightly cheaper because you skip a middleman.

In 8 of 8 chains, buying the finished block is the cheapest route, and it is not close. The median integration penalty is 1.65x, which means doing it yourself typically costs about 65% more than not bothering.

Coal is the extreme. One enchanted coal block costs 26,835 coins if you buy it. Building the same block from raw coal costs 235,062, which is 8.8 times as much. Redstone runs 6.4 times. Even diamond, the tightest chain in the set, gives you nothing for the effort.

You can do every step correctly, own the whole process, and end up 208,227 coins worse off on a single block than a player who pressed one button.

Diamond is the closest thing to an exception and it is worth understanding why. Buying enchanted diamond and compressing once costs 206,347 against 205,992 to buy the block outright, which is near enough a tie. Diamond is the busiest chain in the set and its enchanted tier carries a gap of only 7%, so entering the market there costs almost nothing. Where the gap is small, integration is neutral. Where the gap is large, it is a hole.

2️⃣ Where the money goes

The answer is the gap from Episode 10, applied at every hop.

The raw tier carries a median gap of 77% across these chains. Gold raw runs 98%, redstone 91%. The enchanted tier drops to a median of 11%, and the block tier to 3%.

So the integrated route enters the market at the single worst place to enter it. When you buy 25,600 raw diamond at instant buy, you are paying roughly 45% above what a seller of those same diamonds receives, and you pay that on the entire input cost before any crafting happens.

The player buying the finished block pays a 2.8% gap once, on a cheaper item, and is done.

This inverts the usual story about middlemen. The middleman is not adding a markup you can avoid by going around them. The markup is the entry fee to the raw market, it is enormous, and the middleman is the person who already paid it.

3️⃣ Redstone, in coins

Percentages let you nod along without feeling it, so here is one chain written out in full.

An enchanted redstone block costs 25,488 coins to buy. To build one, you need 25,600 raw redstone. At instant buy, raw redstone costs 6.37 coins each, so the input bill is 163,052 coins.

You then perform two compressions, both of which take real upgrades to automate, and you finish holding an item worth 25,488. The integrated route has cost you 137,564 coins more than the lazy one, which is 6.4 times the price of the thing you made.

Now look at where that money went. The raw redstone you bought had a 91% gap, so the sellers of that redstone received about 15,360 coins for it. The difference, 147,692 coins, went to nobody in particular. It is the toll for crossing the raw market in a hurry, and it is larger than the entire value of the block you were trying to make.

4️⃣ Who the middleman actually is

If the integrated route loses this badly, somebody must be winning, and it is worth naming them.

The winner is the patient player who never touches instant buy. They place a buy order for raw redstone at 0.60, wait, compress once, and place a sell offer for enchanted redstone at 688. On 25,600 raw units that is 94,790 coins of margin, taken without farming anything and without owning any step of anything.

They are not adding value in the way an integrated producer imagines a middleman does. They are being paid for waiting, which Episode 10 established is the actual service the gap buys. Trying to cut them out by doing every step yourself does not recover their margin. It just means you pay the gap they were collecting, at the worst tier to pay it.

5️⃣ The second reason, which is worse

Episode 12 found that block markets are tiny, and that the second compression step usually destroys value because almost nobody trades blocks. That finding has a mirror image here.

A thin market with few buyers is a cheap market. The block is not underpriced because the game is broken; it is underpriced because there is barely any demand for it. So the item you were trying to manufacture is one you could have picked up cheaply from someone who wants rid of it.

Put the two together and the integrated producer is buying inputs in the most expensive market on the chain in order to produce output for the cheapest market on the chain. Both ends work against them at once.

6️⃣ When integration does work

All of the above assumes you buy your raw materials. Change that assumption and the conclusion flips.

If you farm the raw material yourself, it costs you time rather than coins, and you never pay the 77% entry fee. Now the question is only which tier to sell at, and for a farmer holding 25,600 raw units the answer is the enchanted tier in 5 of 8 chains and the block tier in 3. Selling raw is the best option in 0.

The coin figures make the reversal clear. A farmer holding 25,600 raw coal gets 128,413 coins selling it raw and 211,064 compressing once, so one step of integration is worth 82,652 coins to them. The same chain punished a buyer by 208,227 coins. Same craft, same item, same minute, and the sign flips entirely depending on where the raw material came from.

Notice also that the farmer should stop after one step on coal, because the block tier pays 25,000, well under the enchanted tier. Integration is not a direction you keep travelling in. It has a stopping point, and Episode 12 is the method for finding it.

That is what vertical integration actually means in economics. It is not buying your inputs from a market and processing them. It is owning the production of those inputs so that no market sits between you and them. A firm that buys steel and bends it is not integrated. A firm that owns the mine is.

Key characteristics of a chain worth integrating:

• You produce the raw input rather than buying it
• The gap on the raw tier is wide, so avoiding it is worth a lot
• The tier you sell into has real weekly volume behind its price
• The crafting step itself is automated rather than manual

7️⃣ The make-or-buy question

Economists have a name for this decision and a good answer to it that is nearly ninety years old.

Real-world parallel: Ronald Coase asked in 1937 why firms exist at all. If markets allocate resources efficiently, why does anyone employ people instead of buying every task on the open market? His answer, in The Nature of the Firm, was that using a market has costs of its own: finding the price, negotiating, enforcing the deal. A firm grows until the cost of doing one more thing internally exceeds the cost of buying it. That boundary is exactly the one being tested here.

On the Bazaar there is no negotiation and no enforcement, so the cost of using the market collapses to one number, the gap. The gap is the whole reason a firm would exist here, and it is why integration pays for the farmer and not for the buyer. The farmer avoids a real cost. The buyer pays it twice.

8️⃣ What to do

If you are buying materials, stop pricing the recipe and start pricing the outcome. Look up the finished item before you buy inputs to make it. On these eight chains, the finished item wins every time, and it takes ten seconds to check.

If you are producing materials, integrate one step and usually stop there. Sell at the enchanted tier unless the block market for your item happens to be one of the few with real volume.

And treat any plan that starts with buying raw materials in bulk with suspicion. That is the tier where the market charges the most for entry, and it is where the integrated strategy quietly loses before it starts.

9️⃣ What I could not measure

Everything here uses instant buy and instant sell. A patient player placing orders at both ends narrows every gap in the chart, and that helps the integrated route more than the buy-it route, because the integrated route crosses more gaps. It does not close a 8.8x hole on coal, and it does not change which route wins on most chains, but it does shrink the margin on the tighter ones.

I also cannot price the time. If farming raw diamond is enjoyable, the integrated route costs you nothing you wanted to keep, and Episode 13 already argued that this is a real input rather than a soft one.

Pick the chain you work in and price all three routes tonight. It is three lookups and a multiplication, and on at least one of these chains the answer is going to be several times larger than you expect.

Coming next: Comparative advantage. Why two players both end up richer by specialising, even when one of them is better at everything.

Prices from the Hypixel Bazaar API on 2026-09-05. Compression ratios are the standard 160-to-1. Routes are priced at instant buy, and the farmer figures at instant sell.