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I really wasn't saying that you cannot make money, but that the money you make is less than the amount you'd get by selling the mats.
I'm pretty sure I understood the difference between making and losing money, hence the point I made about Iron Hauberks and Shining Silver Breastplates. You can still make money(yes, meaning an overall gain of it) even after you count in all your mats, and the price to put the armor up for auction. Even though these specific items may not make you money on your server, you may take the example of it and apply it to other items.
Thinking back on it now, there are quite a few more items for BS you can craft for cash. One of the first green helms you can make(almost ALWAYS the lowest mail helm on the AH) can fetch quite a bit because it has good stats and is lower leveled than most others that drop. I also made some good coin selling bronze darts and steel axes(both throwing). Since both of these have stats on them, I simply advertised it in the trade channel and had quite a few warriors buy them off me.
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Niche markets only work until competitors for the same niche arrive - then it becomes a price war, ultimately destroying the niche.
Not precisely. Economics teaches us that prices will always result in zero economic gain unless there is a monopoly. This means that whenever there are no competitors, you'll make an economic profit(as you set the price). If competitors pop up, you'll make zero economic profit, which still means total profit for you. Too many competitors = loss, until someone leaves the industry and you go back to zero economic profit.
As there are barriers to entry to WoWconomy(such as having to continuously post your auctions up) and diminishing returns on inventory(having to use your slots up/having to pay to put your auctions up) it occurs quite often that you will hold a monopoly to certain markets.
To sum it up, I'll repeat it again that you CAN make money off of crafting. You just have to be smart about it.