Mercantile Ventures: ROI low?

Trying out the rules for mercantile ventures recently, both my player and I were surprised at the rather small payout one receives on the investment. We actually tried it with a quite low-level character (lvl 3) trading between market sizes 3. I read somewhere, that the magic ratio of 1/33 should also hold true for the mercantile ventures, but this seems not to be true for the "average caravans" in that chapter:  A Caravan of 30 wagons costing 10800 gp earns 1150 gp/ month, which is about 10%, but considering one also has to buy cargo for 40000 gp, actual expected revenue is far lower. The ROI is 50 months, not counting the risk of loss of cargo or men. The same is true for the other caravan sizes. In addition, even acquiring trade-worthy cargo for such a large sum seems difficult. 

Reading in this forum, both of us suspected a far larger payout. Getting more than an insignificant amount of xp with venturing seems to be quite impossible unless one trades between class 1 markets.

Is my analysis correct or did I miss anything? If it is, I may allow a surcharge for the venturers because of dangerous trade routes.

I think you have ROI mixed up with what the secret ratio represents.

The secret ratio says that somebody with Xgp in capital should be able to earn roughly X/33 gp per month without taking on serious or unusual risk (and hence exceeding that much income is the key to gaining XP).  IE: a peasant with 100gp of capital should be able to make a net profit of about 3.3gp per month.  Alex has stated elsewhere that they actually produce quite a bit more than this but have to give a good deal of what they make away to others.


The ROI is 50 months


I'm not familiar with ACKs mercantile ventures, but in business, ROI (Return on Investment) is a percent or ratio (Net Profit / Cost of Investment). It is not a time interval. For example, if I buy a stock at $100 and sell it for $120, then my ROI is (120-100)/100 = 20%. ROI does not look at the time it takes me to profit from my investment.

I think you actually meant the Payback Period, which is the time it takes to recoup the original cost of an investment. The time it takes to "break even". It's a crude-but-easy metric that managers often use to compare projects. It's simple to calculate, but does not take into account changing cashflows after the payback (i.e. you might quickly recoup the value of the investment, but returns could drop off after that time) or the time value of money. It is inherently biased against longer-term projects.

If I was a player comparing investments in ACKS, I'd probably take my finance professor's advice and attempt to calculate a metric which takes into account the time value of money, such the IRR (Internal Rate of Return) or the NPV (Net Present Value). They're much harder to compute and use, but are considered better metrics if you get them right.

You are choising the wrong merchandise, or the wrong markets. You have to chose markets with a good diference in demand modifiers (preferebly on several merchandises, and bether even on luxury goods) load as many things as you can  (at leats one luxury good) and make the journey. A good journey should allow you to double your investment. 

PD: take as little guards as you dare.