Don't let it work. This isn't about teaching moments, its about internal campaign logic and sustainability of play.
In a city of any size, a smith, as not only a skilled craftsman, but a member of the craft that makes the tools for all of the other crafts, is going to be in a Guild.
And buddy, Guilds rarely let their members give out freebies...especially high-profile ones.
Besides, the smith has to eat, too! He charges what he does so he can feed his family. He's a working man- do you know any autoworkers who would build a Bentley for free just because someone- even a LOT of someones- asked? He can't
afford to.
Not only can't he afford to pay for all of the sword's material components, what happens when the BBEG whose minions the kid's been whupping with the Sword of Über demands the same deal...except he's to do it or
die?
If you really want the kid to have the sword without paying for it, make an adventure out of it.
The kid's ploy has some kind of effect, but the blacksmith protests- citing the above facts about not being able to afford the materials for such a weapon without starving his family and ruining his business.
"However," says the blacksmith, "If you bring me the materials, I will make this sword for you. There is something about you that tells me I should do this thing."
Then you send the kid out on adventure after adventure.
It will be like a combination of the fairytale of the Little Red Hen (
Fairy Tale / Folk Tale CyberDictionary) and that one (whose name escapes me) in which the hero starts off on a quest for one thing, only to find that he must exchange some particular thing of value for it. He goes off to find
THAT thing, only to find he must use
something else to retrieve it. So he goes off to find
THAT object, only to find...well, you get the picture. Eventually, he finds the "lynchpin" object, and backtracks his adventures to his point of origin, doing the exchanges, trades and tasks he agreed to do along the way, ultimately achieving his original goal.
(IOW, to get the Blacksmith to do him a favor, he must do favors for someone else, who demands a different favor, and to do that favor, he must do someone else a favor, ad nauseam.)
FWIW, the fairytale is sort of a flipside cousin of the proverb "For Want of a Nail."
For Want of a Nail (proverb) - Wikipedia, the free encyclopedia
Done right, the kid will be having enough fun on the adventures, he won't notice you're deferring his desires to a later point in time.
