Grinding for cash can be a great way to make money, but only really after around level 35 (or until silk cloth can consistantly drop from the humanoid mobs you kill. On established servers, you can make reliable cash out of wool cloth, because it doesn't drop from a wide range of mobs, and can often be in high demand from high level characters building up their tailoring or first aid skills, so you should sell all that you find at the Auction House.
Before the mid 30's, you make more money out of general questing than you can through grinding, because the mobs won't drop consistant amounts of money, and the green items they drop don't generally sell well.
If you really need to make cash pre-35, pick the quests that offer cash rewards, and do them over others. You can see the reward you will recieve in the quest log. Quests ataround level 20 can give 10 silver, which is quite a good amount for that level, and not really achievable through cash collection.
Another important tip regarding cloth, is that if you don't intend to sell it at the Auction House, you should convert it (either by making bandages or bolts of cloth, if you are a tailor). These sell better than their components, and Silk bandages are easy to get up to. Sell any quest reward items you get that you can't use. If you are an enchanter, you can disenchant them and sell the shards at the Auction House (or use them, of course).
From level 36, you should be grinding the Venture Co. Meteorlogists in the Stranglethorn Vale. They drop lots of gold and die quickly. These mobs can single-handedly pay for your level 40 mount. Grind these guys until you have enough cash to pay for it, then move on.
The next spot for cash grinding is throughout the Badlands. There are a ton of rock elementals here that drop all sorts of grey and white items that vendor well. You can make tons of cash of these guys, and they are mostly easy to kill. Elementals are good to grind because they always drop something, they are never in packs, and don't call for backup. They also don't flee, so they can't bring adds unless you make a mistake with fear. They generally make for safe kills.
From about 45, head to Tanaris, and kill the wastewander bandits, followed by the pirates. Later on there are also ogres to kill. These 3 groups drop silver and cloth, and many chests can be found in the area. This should take you into the 50's.
My favourite grinding area for cash and experience is the Eastern and Western Plaguelands. The mobs there are undead, so if things go pear-shaped, you can shackle and flee. They also drop silver and cloth. The best part is they increase your faction with Argent Dawn through kills and the scourgestones they drop. This allows you access to some items that they sell, including good food and shoulder enchants.
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