I heartily endorse the idea that just because Merlin McMagicMart over there makes a magic sword doesn't mean that he can automatically sell it.
Another rule to look at is the GP limit by community size in the DMG, which gives a rough measure of how much GP the community has in "liquid assets." Even if everyone in the village WANTS his potion of fire breath (and I don't know why a farmer or a tailor or a book-binder would?), they only make so much money. If he wants to sell it, he may have to move to a bigger town.
And even then, it's worth introducing complications. Guilds, monopolists, kings who
technically own that metal he found in that cave and aren't going to let him start up a market without getting their cut. Supply chain complications. Dwarves.
I would say this: if he wants to do it
the easy way and just make gold, he can only sell it for half.
If he wants to sidetrack the party into a series of adventures and plot points about starting up a magic shop, he might be able to make more, but it's not going to be simply transactional, at least not at first.
And then, if he opts for the latter, you can include his "profit" in how you award treasure for the level -- take it out of the GP the party earns. And you can have interesting adventures in economics.