Buy High, Sell Low is a Dumb Economic Model

[Loonook]

Well, firstly, I've always thought that magic items really shouldn't be bought by players, only sold.

Especially in earlier editions, where they were not very easy to make.

Yeah, I do agree with this point. But you do have a large amount of items that never go away. Heck, if we actually had a living version of dungeons as they went a peddler could just come in, collect all of the items in the first couple rooms of the Tomb of Horrors and buy himself a small nation.

But it also seems silly that a character can sell something and cannot buy something. They can also craft... But crafting costs you XP. Hand-me-downs suck, and I know I love buying new shiny things. If those shiny things were keeping me alive while battling against an undead archmage? Yeah, I'd look into purchases! .

I think that the market supports not only agents but auctions, and letters offering rights to what they retrieve from various sites. I don't think we should all have to "pay the iron price" to get nice things.

Slainte,

-Loonook.

 

[DragonLancer]

Am I the only one who thinks 50% makes sense? I mean IRL shops buy the items they sell at 50% (or less) too.

I've always done sales to shops and the like at 50% of the item's value. Makes more sense to me.

 

[Nightson]

The economics of magic items suffers from three things that make it really weird compared to modern economic counterparts.

1. Magic items never degrade. Put on magic fullplate, get hit ten thousand times, dunked in acid, scorched by fireballs. In 4e, it's the same as when you bought it. In Pathfinder it might have taken hp damage (but probably not given most DMs) but even if so magical repair is very easy.

Obviously in our world, we can't cast a cantrip to make sure the car is back to working in perfect condition. This would significantly increase the resale value of magic items. Alternatively, the GM could implement a durability system that very slowly degraded magic items. The first option is more to my liking, but tastes may differ.

2. There's no steady stream of better models coming out. This is something that we as a modern society generally expect. Look around you, how many things will there be no new model or type to buy ten years from now? Heck, how many things can you spot at hand that will have a newer, slightly better version out every year (you're reading this on one).

Magical items don't work like that by the rules. Nobody is tweaking the spellwork on flaming swords to make them just a bit hotter without melting the steel, a flaming sword is a flaming sword whether it was made a hundred years ago or yesterday. In fact in a lot of fantasy, the idea is of a more magical, stronger past then the current time. It's possible the thousand year old flaming sword should be more potent flavorwise then the one made yesterday.

This will again, probably increase the resale value of most magic items. If you buy that flaming longsword off that adventurer, you're not going to have a customer turn their nose up later because it's an old model.

Although, choosing to let things advance like the modern world could be hilarious too. "Ahh, you'll want the Pyrus Mark VII Flaming Sword, it's nearly twenty degrees hotter then the Mark VI with a 36% scorching increase!"

3. Magic item economics doesn't take demand into account. A +1 Axiomatic Whip and a +1 Keen Longsword are the same price when you try and resell them. This is because trying to create a demand value for every magic item combination in the book is simply impossible, it's not the fault of the developers that this isn't in the rules.

It's not really feasible for one GM to come up with listings for every possible item either, but what the GM can do is eyeball a value for all the magic items that actually show up in game. This can give a rather potent in game reason for the resale value being lower which I think most players would instantly understand. But by the same token, items which would be pretty desirable, simple +1 longswords, wands of cure light wounds, etc. should have a higher then base resale value.


Of course, a lot of GMs don't want to fiddle with the economics of the game because the economics of the game aren't really economics, they're guidelines for what gives a balanced wealth according to level such that the party can't get resources that unbalance combat encounters.

The easiest way to not have a problem with that is to have players who look at a hundred thousand gold surplus and reach for the stronghold builder's guide instead of the magic item lists.

Most players who complain about resale prices are just complaining in the natural way all humans do about something which isn't 100% in our favor, having something to gripe about can be a good, fun thing.

 

[amerigoV]

And I thought this thread was going to be about gaming books.

In a way, it is. Its a question of what to do with stuff you have. Do you just dump it to get cash (1/2 price books), hold the stuff and try to a better price (EBAY), give up your life and run a store (you get the best "price", but now you have overhead), or hope you hit the lottery and can hire someone to run the store while you sit back and enjoy yourself.

 

[Dannyalcatraz]

1. Magic items never degrade.

For the most part, NOTHING in D&D degrades with use. There are exceptions, but let's be honest- most times someone is using "Mending", it's to fix something that was broken "of-screen", and the "Repair" spells exist only because Warforged needed special healing spells.

2. There's no steady stream of better models coming out.

Sure there are- they have weapons with more plusses, or- in certain iterations- additional enchantments. Ever hear of a Flame Tongue Frost Blade?

3. Magic item economics doesn't take demand into account.

You're right...but like I hinted at upthread, that area of the economy is absent from even the mundane items.

But there is nothing stopping a DM from introducing scarcity and other pressures on the demand for an item- mundane or magical- from affecting price. Our group has been doing things like that for a couple of decades...and I'm the only economist in the group.

 

[Starfox]

The real medieval economy was where goods were constantly scarce - supply could never match demand. Prices were regulated by guilds and laws, not by supply and demand. Goods were used and re-used, repaired over and over. I think the 50% sell price models this fairly accurately. This applies to lowly home-made goods and to magic items - skill and time is always in short supply.

Assuming the 3.5 model in the following.

An interesting experiment would be to have a PC-run "magic shoppe" in organized play. With a number of players in the same setting, a "market" could potentially develop. If a PC or group of PCs tried to compete with the 50% bye price, 100% bye price NPCs use, how well would that work? How large a group of customers does a magic item shoppe need to survive on a lower overhead than the basic 50%?

I think working as a magic craftsman could potentially work, making items to order at 75% of normal price. You are selling your xp at the rate of 1 xp per 12.5 gp each. But since you'll basically always be a level lower than your adventuring companions, you'll be making 50% more xp on the same adventure, and being better equipped probably makes you at least as powerful as they are. The problem is time; you can only make 300 gp a day this way, regardless of level (since everyone makes magic items at the same rate of 1,000 gp per day). But making items to order is quite different from running a magic shop that actually byes things on speculation.

 

[Mallus]

Buy high/sell low works for GameStop and its customers.

(for certain values of 'works')

 

[StreamOfTheSky]

I don't understand the "overhead" cost arguments in a game with bags of holding.

Am I the only one who thinks 50% makes sense? I mean IRL shops buy the items they sell at 50% (or less) too.

Pretty much everyone who plays 3E/PF agrees with you.

 

[Loonook]

I don't understand the "overhead" cost arguments in a game with bags of holding.

Yes, as a merchant I want to place all of my pretty, shiny, hard-to-display goods in a sack that has the storage space of a fridge and can easily be damaged by flame, piercing, or someone deciding to just snatch it from its location.

Think of a jewelry store... They don't just store all of their gems into a velvet bag. They have display cases, little alcoves for pricier goods, and a couple of nice men standing around the merchandise who would be more than happy to drill you with their high-caliber guns. A lapidary traveling with a large amount of uncut stones will have a bodyguard and be carrying his unbreakable, undrillable satchel with its three-lock system.

Why would a place where almost every item is worth more than a peasant makes in a lifetime NOT protect its wares in a sensible fashion. A service-response agreement with the Mage's guild, bribe to the Rogue's guild, cost of replacing broken wards, hirelings, rent of the space, enormous amounts of taxes, travel to guild or trademeets, agents in various cities who may be contacted by various magic/non-magic communications, feeding the carrion crawlers under the stairs...

There's a lot of overhead .

Slainte,

-Loonook.

 

[Rogue Agent]

Clearly, the merchants have the "buy low, sell high" practice down, but what if the PCs want to do a little mercantile campaign? What if they want to profit without resorting to tomb-robbing, theft, and robbery? Plenty of adventuring could still be had in such a campaign. What would it take to make such a campaign work?

The most robust system for handling player-initiated trade in an RPG is probably Traveller. I'd agree with those saying you should look long and hard at that and see if I can figure out how to adapt it to merchant caravans in a fantasy setting.

The other option would be running some kind of establishment. At this point it's question of how much detail you want to go into. (Which, for me, would mean "how much detail would actually be fun".)

The simplest way to do this would be to assume that the fundamental economy of D&D actually does make sense: In 3E, for example, it makes sense for a merchant to pay roughly 50% of final price of a magic item and then resell it.

Assume, therefore, that buying magic items at 50% of their final sale value allows you to earn a nice 10% annual profit. Actually, for easier math, let's assume 12%, which would mean a 1% return per month.

So there's your easy answer: If the PCs maintain a reasonable storefront, calculate their total volume of inventory (at 50% of sale price), give them a 1% profit on that volume per month.

As a model this leaves much to be desired, but it's simple. As more details are demanded, you can start tracking things like:

- What items are actually being bought and sold to generate that profit
- Reducing "effective volume" based on items they're overstocked on
- Effects of competition
- Effects of a Profession skill check
- Effect of how often the store is kept open
- Capping returns based on the size of their current market (fewer people buying a town of 10,000 than in a metropolis of 1,000,000)
- Figuring out exactly what size storefront is needed to adequately sell a given volume of magic items (and then accounting for the costs of that storefront)

And so forth.

A really easy way to develop this is to start with a very simple model and then start accounting for stuff when your players decide they want to try it. This dials the simulation into the level your players are interested in.