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Message: <blockquote data-quote="Jfdlsjfd" data-source="post: 8336200" data-attributes="member: 42856">Pricing magic items according to economic theory is difficult because I feel most people except magic item prices to conform to a price mechanism, where price settles at an equilibrium, allowing supply to match demand, and demand be based on the objective usefulness of an item, based on its rulebook description -- so more people would be interested to buy a +2 fork over a +1 fork, until the price of the +2 fork reaches the point of equilibrium by lessening demand. However, there are reasons to think that magic item market could work differently.1. Availability of goods and local monopoliesThe equilibrium is functional only if there is a large number of buyers and a large number of suppliers. Depending on the game world, there can be a strong chance that there is few (only high level characters can make items, and they have better things to do) to none (legendary magic items and artefacts can't be created today, they are relics of a past magic-using empire...). The owner of one of such items could ask whatever he wants without fear of losing a prospective buyer to a competitor... because he'd have an effective (albeit maybe local) monopoly on one type of items. Of course, Enchanter Tim could sell twice as many +1 longsword each year if he reduced the price by 37.84%. But... Enchanter Tim's behaviour isn't replicated by simulating an infinite number of suppliers. Enchanter Tim doesn't care about selling more sword. If you want a +1 sword, you'll pay him 5,000 gold, so he can hire a group of adventurers to travel across the land and fetch him the Great Book of Herbs from Candlekeep. Locally, the price of the +1 sword isn't tied to utility, it's tied to the price of hiring a band of heroes -- even if Tim's effort is minimal to mumble a few magic words AND he could make boatload of money (but he isn't interested into gold... he'd like a 5,000 gp diamond, though, and he would pay more than 5,000 gp for that). Technically, he could mumble twice as much and create a +2 sword. There is no difference in effort on his part ; so the price could be 5,000, whether you seek a magic sword +1 or +2 from him. You wouldn't certainly be able to ask for a Plussetwo sword, what would you get? The promise to enchant it at the best of his ability... How loud will he mumble? Could you really sue him for a refund if he mumbles not a lot but your sword is still glowing when orcs comes near?2. Asymetry of informationDepending on how one views his universe, several choices can be made on the inforamtion level about the magic item. For a gamer's point of view, a +1 sword is less useful than a +2 sword. This is objectively true. But in game... (a) getting information about whether an item is magical or not is impossible. You could pay someone to cast Detect Magic on the item, of course, but it has its own cost of hiring a specialist so you wouldn't do that for a low cost item, and there is a possibility that it is only detecting a Nystul's Magic Aura and not a true magic. Even if we assume that you're sure it's magical, there is no chance of distinguishing whether the blade once belonging to the Runed Knight, reforged into a glowing, red longword, and the holy longsword wielded by a paladin who gave its life protecting a bridge from goblins while an innocent family fled is bearing the more powerful enchantment. You could line up naked commoners and strike at them all day long in order to establish which weapon is probably better, but such a method could be... immersion-breaking. You could pay someone to cast Identify, but again it might be easily fooled and... the lack of information goes both way. It is strongly possible that the seller of the magic weapon ignores the difference between +1 and +2, especially if he looted the armor on the aforementioned dead paladin's body. So your +2 could command the same price as the +1 one, 'cause both glow shiny. Asymetry of information can drive the price of any item arbitrarily low, especially if the properties of the item aren't immediately obvious, like an absurdist web (if you don't know you can put item into it...)3. Quality of luxury items explaining more of the price than enchantmentAn elven chain costs 5,000 gp and his effectively a +1 chain shirt that you can wear without proficiency in medium armor. Buyers with 18 DEX will find elven chain as useful as Padded Leather (worth 45 gp). Characters proficient with Medium Armor, which constitutes the vast majority of the prospectives buyers for armor, will find the elven chain as useful as a breastplate (worth 400 gp). How can such a price be rational? Who would buy it if breastplate is equal?For most people, a +1 longsword will have 0 utility (unlike a +1 gardening implement). For most warrior, it will have a very low utility. They won't measure that it allows them to hit 5% more often and do 22% more damage, especially if damage isn't a wound. Let's say they can somehow get that they down their opponent in one hit 37,5% of the time instead of 25%, so there is some measure of increased utility, but is it worth paying 500 gp over 15? And once you have a +1 sword, would you buy a +2 sword, 233 times the price of a regular sword, that does most of the needed job? Especially since the difference between a club (cost: 1sp) and a longsword (cost: 15 gp) is more damagewise than the +1 enchantment? What would you pay a +1 club if you're trained in martial weapon (like any regular fighter would be, the normal customer for weapons) and not expecting to fight creatures immune/resistant to nonmagical weapons (like the regular, non heroic customer would)?Most of the value of the magic items might come from something other than usefulness.  It is dubious that the difference in effectiveness is the reasoning behind the pricing. People might not priorize only that when making their buying decisions. It could be that the enchanting is part of what make the item attractive, but, say, if nearly all weapons coming from the Elfland are +1 but their main quality is that REAL noblemen will have only the finest Elfland-made weapons, and the noblemen group of buyers far outsizes the "heroes who will be interested into getting +1 on their attack and damage rolls" group of buyers, you could have 15 gp longsword, 450 gp longsword-from-Elfland and 500 gp +1 weapons from Elfland. Too bad nobody makes weapons as they do traditionally in Elfland.  Of course, one could wear a breastplate instead of an Elven chain, but you wouldn't want to be seen in a regular breastplate.4. Regulations, especially sumptuary ones.Price could simply be regulated. Most settings will lack the authority to actually enforce a "magic wepons permit", but it's not something ot be discarded totally. If you have a sumptuary laws forbidden a gondola to be sold more than 500 gp, your folding gondola enchanted with a self-directing gondolier won't be priced more than 500 gp. Of course, there are many buyer who would pay, but the seller isn't interested in selling for more and risking having all his family killed and his hands cut off for overpricing.Combining some or all of these, you could have realistic prices as arbitrary as you want. I find it more useful, nowadays, to consider gold accrued by PCs as a reflection of their buying power, not actual stack of gold pieces. High buying power is a result of having the connections needed to locate and acquire, probably commission, the item, and have price list not reflecting a hypothetical magic item market and embrace the gamist aspect of it and use [USER=6932123]@Kinematics[/USER] excellent's analysis.</blockquote>

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