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Suppose we have standard world of fantasy RPG videogame. The MC (main character) earns money by killing monsters and then selling loot. Also, sometimes there are people happy to pay generous reward for slaughter of especially vicious monster. As an adventurer they aren't a member of any guild.

The MC can also craft artefacts. Some ingredients can be bought, some can be collected (like herbs), some can be stolen, some can be harvested from dead monsters. And then from these ingredients an artefact can be crafted by the MC and then sold. If total cost of ingredients needed for crafting an artefact < market price of the artefact, then the MC can get profit. But for some strange reason it is always more profitable for the MC to just sell ingredients at their market price, than to craft an artefact from them and then sell it at market price. Why? Especially considering that there seem to be people in this world who find it more profitable to sell crafted artefacts, rather than sell ingredients needed to craft them (otherwise no new artefacts would be available for sale).

P.S. I'm not a writer, I just encountered this situation in a videogame RPG and wanted to see somehow realistic explanation for such situation. For this reason crafting system of the game doesn't matter.

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    $\begingroup$ How standard is your video game? And how the crafting system works? The accepted answer would not work in a typical RPG. $\endgroup$
    – Otkin
    Jul 12 at 9:25
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    $\begingroup$ Yeah much as I love the big green tick there are other great ideas here too. $\endgroup$
    – Ash
    Jul 12 at 15:08
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    $\begingroup$ If it takes X time to find and sell the ingredients for \$50 but 3X time to craft it and sell for \$100 then you're missing out on \$50. This is why hammer manufacturers don't just hoard all the hammers and build houses themselves. $\endgroup$
    – MonkeyZeus
    Jul 12 at 15:18
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    $\begingroup$ One thing the accepted answer seems to be assuming is that crafting always succeeds and there is no failures. Once you start accounting for failures that can drastically change the equation. $\endgroup$
    – Joe W
    Jul 12 at 16:32
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    $\begingroup$ Real-world example of this: in Runescape unrefined ores often cost more than refined bars because a lot of people like to buy ores, smelt them to grind XP, and sell the resulting bars. Metal armor and weapons are often cheaper than bars for the same reason. $\endgroup$
    – Ajedi32
    Jul 12 at 18:42

17 Answers 17

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Because the adventure's skill and reputation is always below that of a specialized craftsman.

Bob the Blacksmith has been making swords all his life. He's spent 40 years perfecting the art of the turning metal into blades of death. He knows how to manage the furnace and molten metal and his collection of special hammers in order to create a wonderful sword.

He's known and trusted. Carl says: "Bob's sword saved me from a bandit last year. I never go anywhere without it!". Everyone trusts Carl.

Mr Adventurer walks into town with a clump of a magic metal ingots and blessed artifacts. Uses the town forge to knock up a sword that sounds good on paper, but being made by someone who hasn't spent 40 years making swords its unlikely to be of such high quality. Did he remember to quench between impacts? Did he cool it down too fast too harden it correctly, or too slow? Did he use the right blend of wood and coal?

Also Mr Adventurer may have a reputation for saving the town from the dragon, but Mr Adventurer doesn't have a reputation for making quality swords yet. Nobody has used his swords before, they're unknown.

As a new entrant to the market, Mr Adventurer can only sell his goods at a discount. Because they're unknown quality - they attract a lower price.

Were Mr Adventurer to sell the parts to Bob the Blacksmith, then Bob the Blacksmith could make the epic sword with his quality standards and reputation, and thus sell it for a higher price.

if Mr Adventurer spends a few years making good swords, and develops a brand and gets reviews, then he could get a good price.

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    $\begingroup$ +1, but also worth mentioning operating costs and opportunity costs to the adventurer. Professional smith in guild keeps forge at operating temperature all the time and smiths take turns, therefore fuel and other time-based operating costs are minimised per item. Adventurer has to set up forge plus workshop, get forge to operating temperature etc to make one item, operating cost for one item probably 2x or 3x that of smith. Adventurer then has opportunity cost - time spent for low profit for one item compared to same time for better profit killing and looting from monsters. $\endgroup$ Jul 12 at 7:18
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    $\begingroup$ It can explain why break-even cost of sword made by an adventurer is higher than market price. But the question is different. Market price of the sword is lower than market price of raw materials needed for production of said swords (i.e. metal ingots ). I don't see how this answer explains such curious predicament. $\endgroup$
    – user161005
    Jul 12 at 7:43
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    $\begingroup$ @user161005 It explains why the max price is lower than parts for a new untrusted entrant into a market. Imagine "Dominos pizza" starts making airliners. Airlines wont trust it and the first to take a gamble will have a max price that's significantly discounted, lower than the cost of the parts in all likelihood, to represent that risk. $\endgroup$
    – Ash
    Jul 12 at 8:04
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    $\begingroup$ This is not consistent with the 'standard world of fantasy RPG videogame', though. Most fantasy RPGs feature level-based craft systems: One needs to reach a certain level in crafting to be able to craft a specific item. In other words, Bob the Blacksmith and Mr Adventurer will craft identical items from the same set of ingredients if they have the same crafting level or use the same recipe. MC's reputation with various NPC factions may affect prices. But it is not related to the quality of items. $\endgroup$
    – Otkin
    Jul 12 at 9:22
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    $\begingroup$ @Nosajimiki Wait, but I'm the OP ... $\endgroup$
    – user161005
    Jul 12 at 15:53
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Because you are selling to shops, not to adventurers

I agree with the accepted answer in most settings, but not in the context of the genre. In many games, the best weapons are the ones you craft yourself; so, there is some assumption that your character either is a capable artificer, or you can at least level up that skill to become one.

However, when you look at the shop systems of most games you will notice that most items sell for WAY less than you could buy them for. Most video games do this purely as a balancing mechanic, but there is a real world explanation for how this kind of thing sometimes happens.

In many games, a \$1000 sword may only sell for \$100, even when you are selling it right back to the guy you bought it from that same day. This confirms that craftsmanship is not the guiding principle here. However, in the real world, wholesale is typically 50-85% of retail meaning that the guy who actually made that \$1000 sword was paid by the shop owner \$500-850 to make it. Videogames general do not define these values so we will assume the real-world values here.

So, why would a shop owner pay the blacksmith up to \$850 for the same sword that he would only pay you \$100 for? You see, the shop owner can not keep high quality wares in stock without the blacksmith; otherwise, adventurers would just always buy his best stuff and fill his shop with worthless junk they are selling, and his shop would very quickly be filled with nothing but a giant pile of worthless goblin spears.

The shop owner also knows that he needs to keep the blacksmith busy enough to make sure that the blacksmith does not provide his wares else ware. So, lets say you are a shop owner who knows a guy who makes +3 longswords. If you can buy up and sell all of those +3 longswords then you can charge a premium on them, but if you can only buy 1/2 of them because you are also selling the stuff adventures are bringing in, then there is the risk that your blacksmith will start selling to the guy across the street from you too. If this happens you have to be more competitive with your pricing on +3 longswords... and any other weapons that have a comparable value to a +3 longsword.

So, the reason shops pay so little for your artifacts is not that they are worth so little, but because you are not actually "selling" your sword to the shop at all. What you are really doing is "trading it in". Consider a new car dealership. Many dealerships buy way more used cars than they can sell, but no matter how shitty your old junker is, they will always offer you something for it if it helps them sell you a new car. Likewise, you could come in with a 6 month old, top-end sports car that is worth more than anything on thier lot, and they still will not give you more than a small fraction of its worth because thier goal is not to buy your car, it is to sell you a new one.

So what is happening is that that your artifact level weapon is being sold following the same business practices they use to buy that stack of 10 goblin spears you also just walked in with. The shop keeper knows that most of what he will buy from you is just going the the trash heap and that selling your good stuff puts his relationship with his blacksmith in jeopardy; so, he offsets the risk and waste of buying your stuff by only paying you a tiny fraction of its worth.

Why reagents don't follow this pattern:

The shop owner is perfectly happy to pay a fair wholesale price on any artifacting reagents you bring in because adventures ARE the expected wholesalers of these materials. If you want a gryphon's feather or a hydra's venom, then everyone knows you buy that stuff from adventurers; so, the shop owner does not want to undercut your profits here. He knows 100% that he can quickly and easily sell them to the blacksmith, and that he can only buy them from adventurers. So he pays you the wholesale rate of \$200 for the materials, which he then retails to the blacksmith for \$250. It's easy pocket money for the shop owner, and it does not actually cut into his weapon sales. Then the blacksmith uses those materials to make a sword he wholesales back to the shop owner for \$700. Then the shop owner retails it for \$1000. Everyone has made a profit, and more importantly, no one has risked thier supply chain in doing so. In business: safe repeatable, low-profit transactions are called your "bread and butter" and they are way more important to staying in business than the occasional wind-fall transaction.

What you don't see as an adventurer is that the shop owner would never pay a blacksmith wholesale on reagents. The blacksmith in the expected consumer of them just as the adventurer is the expected consumer of +3 longswords; so, when the blacksmith does need to offload an over-stock of reagents to the shopkeeper, the shopkeeper would only pay the trade-in rate of \$25 for them because it would be so hard to find someone else to sell them too.

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    $\begingroup$ Wonderful answer, makes perfect sense. And also somewhat explains why you can sell random stuff to anyone doing trade: They're giving you such a bad bargain that even the potion seller can turn some profit (or just break even) on whatever random weaponry you sell him. And if he just breaks even: well he attracted a potential high value customer (the Player) to his shop, so thats good enough $\endgroup$
    – Hobbamok
    Jul 12 at 19:54
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    $\begingroup$ @user161005 the better bargaining position applies to the modern world with its online deliveries. In the average fantasy world, your city has one blacksmith, and if you do something that makes them hate your guts, they will not sell to you, and you will go out of business. Adventurers are notoriously unreliable sources of weapons; the blacksmith is reliable. You need reliable to survive, you don't want to go bankrupt just because the adventurer who sold you random stuff got eaten by a grue. $\endgroup$
    – Erik
    Jul 13 at 5:57
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    $\begingroup$ And I don't think this was mentioned, but is applicable since we're talking about selling for resale: the shopkeeper knows he's selling pristine merchandise from the blacksmith. Lord only knows where your equipment has been, or what it's been through. Shopkeep: "This sword is unused, right?" Sword: Obviously of foreign make, faintly glowing. Blood-and-dirt-covered Adventurer: "Yeah, sure." $\endgroup$ Jul 13 at 15:23
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    $\begingroup$ @user161005 In economics, there is a thing called Game Theory in which each business will modify his products and sales based on the choices of the competition. While Game Theory was not formalized until the mid-20th century, it has been intuitively practiced since the beginning of time. Basically, if the guy across the street offers more for +3 swords, it means he needs to sell them for more, or at a smaller profit. All things being the same, they would compete over prices/volumes/etc trying to collect the largest possible profit based on the other guy's sales strategy... $\endgroup$
    – Nosajimiki
    Jul 13 at 18:56
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    $\begingroup$ but if only one guy is besties with the Blacksmith, then the other guy is almost guaranteed to loose because he needs to offer over and above what that relationship is worth to the blacksmith. Instead, the other guy may find it more worth while to buddy up with the bowyer so he can get exclusive rights to those awesome +3 longbows instead of loosing money squabbling over longswords. $\endgroup$
    – Nosajimiki
    Jul 13 at 18:56
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I'll take an example from RuneScape, a game where this phenomenon is very common.

Other players want the materials to train their skills.

If you want to make armor out of steel, you must first learn to make armor out of iron. You must make a few hundred pieces of armor out of iron before you're good enough to attempt making armor out of steel.

This creates a demand by aspiring blacksmiths for enough iron ingots to make hundreds of pieces of iron armor, and a supply of iron armor that surpasses the demand for that armor by soldiers and other players. Thus, the price of iron ingots is high and the price of iron armor is low.

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    $\begingroup$ Also: Because players created crafts to train their skills, that also devalues the resulting crafts. If every apprentice is cranking out "Magic Armor" for practice, then they end up basically worthless. Runes in Runescape are like this. Hard to craft, but you get experience points. They're virtually worthless to sell though, because they're so easy to come by. $\endgroup$ Jul 12 at 23:39
  • $\begingroup$ The way this makes sense is that a fully trained blacksmith can make high-end armour which is in demand and profitable. They essentially pay thousands of gold pieces for training (buying the raw materials and throwing away the finished "practice" armour). $\endgroup$ Jul 13 at 14:36
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    $\begingroup$ Ha, RuneScape was my first thought as well. $\endgroup$ Jul 13 at 18:48
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The MC isn't the best at crafting and pays the price of opportunity cost.

I'm not a painter. I can take a bunch of expensive paints and craft a terrible painting, and it will be worth less than the raw materials. I'm also not a tailor. If I tried to make a garment out of an expensive fabric, I would just ruin the cloth. I am also not a jeweler. Given a bunch of gold and gems, I'm not going to be able to make anything that's worth more than the raw materials alone.

Crafting only adds value commensurate with the skill of the craftsperson. If you don't have the tools and skills to turn raw material into finished goods, you're at best wasting your time trying by making something that isn't any more valuable than what you started with, and at worst, wasting the raw materials because you don't know how to use them properly.

Even if you have the tools and skills needed to craft, in many cases it's still more profitable to let a specialist do it for you due to opportunity cost and a thing called comparative advantage. Basically, you can craft an item yourself, but the time it takes to do so could be spent doing something else that would have been even more profitable. Here's an example:

Suppose you have collected 10 Foos for a Bar potion, and you can either sell those 10 Foos to the potion maker for $10, or brew them into a potion yourself and sell it for \$20. But in the time it took you to brew the potion, you could have collected 20 more Foos, which could sell for an additional \$20, rather than earning only an extra \$10 by brewing the potion. If this is the case, you'll be more profitable by selling raw ingredients than by brewing potions, despite the fact that the crafted item sells for more!

What's really interesting is that this arrangement is also more profitable for the potion maker - if he's more skilled at brewing potions than finding ingredients (e.g. if he can only collect 5 Foos in the time it takes him to brew a potion), you will both be more profitable if you only find raw ingredients and he only brews the finished product. Both of you should only do the one thing you're best at, which for most adventurers, is not crafting a wide array of useful items.

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  • $\begingroup$ I was supprised that I had to scroll down so for to find the first mention of opportunity costs. While the other answers provide good ideas, this is one contains the real reason, especially as the OP explicitly mentiones that the artefacts crafted by the adventurer have higher market prices than their ingredients. $\endgroup$
    – Minos
    Jul 13 at 4:46
  • $\begingroup$ You also have quality, a smith who smiths every day is going to be far better at it than an adventure who only does it once a fortnight. $\endgroup$
    – John
    Jul 13 at 14:09
  • $\begingroup$ This doesn't apply for most role-playing games (which is what the OP is asking about). As soon as a crafter learns to make X they can do it perfectly. A few, like EVE or Albion, let you specialize and require complex facilities -- in them a devoted crafter can make an X much cheaper and faster, so this answer would apply. $\endgroup$ Jul 13 at 14:42
  • $\begingroup$ @OwenReynolds True, there is no opportunity cost when crafting is instant and perfect. Another aspect to consider that's present in some games, though, is that crafting may only be possible in certain locations (at your home base, in a city, etc.). If you can collect Foos in the forest and sell them there, it may never be worthwhile to spend the time trekking to a distant crafting station. $\endgroup$ Jul 14 at 18:51
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Why does a farmer sell the wheat to the miller instead of milling it and selling the flour?

Why does the miller sell the flour to the baker instead of baking bread and selling the bread?

Because any additional step requires time, resources, and knowledge that one can hardly have, together with capital to make the necessary investment: running a mill is profitable if a large pool of users can be served, so that the needed large quantities can be processed, and so on.

Same goes for your adventurers.

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    $\begingroup$ "Why does a farmer sell the wheat to the miller instead of milling it and selling the flour?" This is called vertical integration. And it exists in real world. This raises a question, why does it exists in our world and not in the fantasy world described above? $\endgroup$
    – user161005
    Jul 12 at 6:55
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    $\begingroup$ @user161005 In a typical fantasy world, there isn't a lot of concentration of wealth. There are nobles who'd have liquid cash to spend on vertical integration but they're relatively few and they probably have better (or at least more urgent) things to spend it on, like armies and tournaments. $\endgroup$
    – Cadence
    Jul 12 at 7:13
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    $\begingroup$ @user161005 Modern 1st world countries are exceedingly wealthy compared to medieval times. Just look at birth rates. Having a baby die is a tragedy, not "Tuesday". As a homeless, jobless person in North America countries, they have access to food, shelter, and medicine leagues better than what most commoners have in medieval times. Note that this does not justify at all that homeless are not "poor"; they are, but relative to medieval times, they are extremely well off, because medieval times are atrociously bad. $\endgroup$
    – Nelson
    Jul 12 at 15:23
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    $\begingroup$ A homeless, jobless person in North America has access to food, shelter, and medicine leagues better than all commoners, and nobles, and royalty had in medieval times, and any other time and place before well into the 19th century. $\endgroup$
    – Mary
    Jul 12 at 23:25
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    $\begingroup$ @Mary the modern homeless person definitely has better access to medicine than medieval royalty, but I'm not convinced on food, and confident you're wrong on shelter. I'd much sooner live in the Palace of Fontainbleau, Buda Castle, or the Tower of London, than in a tent city. $\endgroup$
    – James_pic
    Jul 13 at 10:49
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Diverse Uses:

This is a bit like the 'Minecraft' version of an answer. If you have high-quality steel, do you already know what it will be made into? Sure, it COULD be made into a sword, but maybe the person buying the steel wants four knives. Maybe they make a specialty tool out of it. If you take the steel and make a sword, you can only sell it to a person looking for a sword. With the steel, everyone in the market for good steel is a potential buyer.

Multiple uses: It's exactly the same for your adventurer. Maybe 95% of dragon hide is made into magical books. So you make a magical book out of it. Books are easy to transport, small, and have a ready market. But sometimes, people want dragon hide to fix a book. Sometimes they want to make dragon-scale armor. Occasionally, a rich noble wants to make a dragon leather jacket to show off just how wealthy and powerful he/she is. Because most dragon hide is used for books, the supply for these other applications is much smaller. Transporting the whole dragon hide might be quite a task. Dragons might hunt people carrying around a dragon hide. But the profit from doing so is bigger than doing the safe and easy thing.

Custom items: Further, those crafting items are usually doing so for their own use. Those crafting for others are likely doing it for a specific client. Either way, if you're making a sword for a specific person, you make the blade a certain length for that person. A magic book with a person's name on it is specific to them and special (like naming an item in Minecraft). The amount of money someone is spending on a magical artifact means they want something special, not just generic. If YOU make the artifact, it's a (fill in the blank magic tryptic). If the artifact is made for a specific person, it's THE TRYPTIC OF MABINOGION!

Guaranteed quality: Not to mention that anyone buying an artifact wants to be sure they are getting exactly what they think they're buying. You could have skimped on dragon hide and made the book out of mixed strips of dragon and gorgon hide. Sure it works, but there's the rare chance of a magical misfire turning you to stone. Perhaps it costs money to confirm that an item does what it is supposed to do (like the identify spell from D&D). Maybe gorgon hide passes for dragon hide, but no one could fake a whole dragon hide. The world is full of cheap knock-offs of expensive goods, so why take a risk?

Economy of scale: Some of the ingredients in an artifact are easier to make, grow or harvest than others. Perhaps guilds are able to grow the rare and special herbs that must never see direct sunlight and have to be harvested only by the light of a full moon. They do it all the time, and cheaply. They use them for their internal market (artifact making) and never sell them to keep others from making artifacts. Your adventurer might need to make multiple attempts to do so successfully, and at great cost. Since the adventurer will sell the herbs, they still are profitable (since the guild won't sell), but the guild undercuts the cost of the artifact by making/obtaining one of the ingredients cheaply.

Specialization: Adventurers are going to be really good at killing monsters. So they get lots of the most expensive/hard to obtain goods. There's lots of profit in this. But adventurers spending their time growing herbs, making spell components, and breaking into the graves of murderers to cook off their fat and make magic tallow candles that must light the enchanting ceremonies are doing things they get less money for. An herbalist will grow herbs better, a grave-robber will dig up corpses more cheaply (and assume the risks of such reprehensible behavior), and why is an adventurer buying the special tools to enchant from a blacksmith when the enchanter already has a set?

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  • $\begingroup$ Economy of scale: Adding to this: an experienced artificer can probably craft way more efficient. Especially with the very valuable components maybe it just needs a sprinkle at the exact right second instead of the whole thing. An adventurer won't know this and use the whole thing. The potion in the end does the same thing, but the Artificer makes 20 out of the same rare resource $\endgroup$
    – Hobbamok
    Jul 12 at 19:57
  • $\begingroup$ "Multiple uses:" I don't understand how this makes it more profitable for an adventurer to sell ingredients than to craft and then sell an artifact. Can you explain, please? $\endgroup$
    – user161005
    Jul 13 at 3:16
  • $\begingroup$ @user161005 Market economics. The more people who are available/want to buy your product (demand), the higher the prices, because lots of people want your single product (supply). once your product is on it's final form, the number of people who want it is limited to those wanting the final form. As a raw material, everyone who can make something from your product is a potential customer. But this doesn't work if there is only one possible use for your product. $\endgroup$
    – DWKraus
    Jul 13 at 3:25
  • $\begingroup$ @DWKraus But then if an artefact is produced, then its price will incorporate opportunity cost. Like if you can make 10 knives or 1 sword and market for knives is really hot right now, what do you do? You either do not produce a sword and produce 10 knives instead or you do produce a sword, but at such price, that successfully selling it will bring you at the least the same profit as selling 10 knives would. $\endgroup$
    – user161005
    Jul 13 at 3:34
  • $\begingroup$ @user161005 Not following you. To extend the example: If you make the sword (artifact) but when you go to sell the sword, no one is buying swords because knives are all the rage, then you get a poor price for the sword, and can't make knives instead. The steel (raw material) would bring a good price for knife making, and you wouldn't be out the cost of making a sword that isn't selling. Or you could make knives at that point. Either way, the raw material (steel) is a safe bet that can apply to all uses. Assuming similar manufacturing prices, which are likely more expensive for an adventurer. $\endgroup$
    – DWKraus
    Jul 13 at 3:41
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In today's world, we make more profit selling craft parts than we do selling the actual crafts. Who we are selling to are the hobbyists, the people who have the spare time to play with making things and the money to buy the parts. Yet, if one were to try to sell the crafts, few people want to pay the price needed to support the crafts person. People don't want to buy the crafts as much as buy the experience of making the crafts. (See the profits that Hobby Lobby is making vs the profits that crafts people make. The average seller on ETSY is making $1/hr.) Same way with art. Few artists can make art full time and survive. Most make their money by teaching art and make their art on the side. In the gold rushes, the people who made the money were those who supplied the miners, not those who rushed there with gold in their eyes.

So, your adventurer will make a lot more by selling the parts, the story, and the hope of adventure to people who want to dream.

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  • $\begingroup$ Exactly! I feel that real-world approaches add a lot of verisimilitude to a story. Consider what we typically pay for socks. Would anyone reading this spend 50 bucks on a single pair of socks? That hardly covers the price of the fleece used. Include time to card, spin, dye, knit, weave in, and block, and it'd be well over up in the thousands of dollars per handmade sock. Some might pay that for charity, and others for a prestigious maker's mark; but then they aren't really buying the socks, but rather the charity or mark. Nobody would buy a thousand buck handmade sock that's "just a sock". $\endgroup$ Jul 12 at 21:24
  • $\begingroup$ ... and the above doesn't include costs like the space to make the socks in, the equipment used (carding combs, spinning wheel, dye and vats, needles, blocking mats & pins, and more I'm forgetting), or the training to learn those skills. $\endgroup$ Jul 12 at 21:27
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Because there are more valuable things to make than the artifact out of the materials

Making an artifact is inefficient with the materials it needs. Sure, bathing the final product in a bucket of dragon's blood really bakes in the power, but the residuum that leaches off makes all the blood that's left afterward useless for most other purposes. The real money is in non-adventurer goods! Just a few drops of fresh dragon's blood suspended in a mixture of herbs and oils can be sprayed around a house to keep bugs and vermin out for over a month, which not only works great but also means you get repeat customers!

When you add together the greater demand and broader consumer base, it's a sellers market for things that your average adventurer just wouldn't care about. On top of that, while I imagine there aren't a ton of artifacts available, there also aren't a lot of adventurers of the right caliber to be picking them up so it's harder to interest shopkeepers in stocking something that may sit on the shelves for years before seeing a real return on investment while also being an attractive target for thieves.

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    $\begingroup$ Similarly (too close to post as an answer) I might be able to make a tasty stew given a load of herbs and bits of dead animal, but an apothecary can make a healing potion. Which is more valuable? $\endgroup$
    – Chris H
    Jul 13 at 11:20
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It is the economics of experience, which has value.

When I have ingredients and transform them into a thing, I create two portions of value: The thing, and the experience. I consume the value of the ingredients and some value of my labor. If I am a novice, the value of my labor is low.

When I sell the thing, its value is lower because I retain the value of the experience.

V(ingredients)+V(labor)=V(thing)+V(experience)

Depending on where you are in a game, those values change. Since one is typically gaining experience so that one will "level-up", the V(experience) is dear and the V(labor) is zero. Thus, the V(thing) will be lower than the V(ingredients).

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    $\begingroup$ I believe this was an effect I observed when I played in World of Warcraft. The auction price of raw ingredients was always higher than the crafted goods produced from those ingredients, because the crafters were producing a surplus of goods, purely to improve their own crafting skills. $\endgroup$ Jul 12 at 18:12
  • $\begingroup$ This is what happens in Runescape, as pointed out by Alexandre Aubrey's answer. $\endgroup$
    – user253751
    Jul 13 at 10:35
  • $\begingroup$ @user253751 Alexandre Aubrey's (very good) answer is focused pretty tightly on dynamic economies often found in MMOs. The "economics of experience" here is general enough to be applicable to many styles of RPG, even an old-school single-player (J)RPG where prices are simply set by the developers. $\endgroup$
    – A C
    Jul 14 at 4:35
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If you want a medieval flavour: because they do not have the monopoly for the artefacts. In our modern economies, we take for granted that if you want to make a widget then, provided you have the means to do so and you comply with local standards, you can do so and then it's up to you to compete with other people selling widgets.

In most places, and most times in the medieval world, it did not work like that. Only the miller could mill grain, in fact if you wanted to mill your own with your own grindstone for your own use, you might have to pay the miller a fee for not using his services. You needed permissions to trade in cities, and could be granted monopolies on production or trade in pretty much any good you can imagine. Often the right to grant these permissions was sub-contracted to powerful guilds, and woe-betide anyone foolish enough to cross them.

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Guilds have the infrastructure to craft at volume, thus getting more value out of individual ingredients that an adventure would not be able to, given crafting requirements

Take, for example, a herbal potion involving two herbs to make a single healing potion.

For an adventurer, that sounds fine, they can make that, and they have the two herbs to do so.

A guild looks at that recipe, notices it involves breaking one of the herbs in half, and tossing one of the halves, and says "Wait - I can make two herbal potions while only using three herbs!"

So that starts to mask some of the actual savings a guild member can pass on to their clients that an adventurer can't meet, as the costs of individual ingredients are in higher demand because there is more to get out of volume of ingredients, but there's also ancillary costs that can be bundled the same way.

When brewing those potions, an adventurer needs to boil the water it's being mixed in, and stir it all together, and pour it out into one flask. A guild can take a larger pot, boil it all more or less the same, then put in two potions worth, or four, or fifteen potions worth, then pour it out into multiple flasks and get multiple potions out. For the same effort of starting a flame, and near ignorable amount of water usage increased. As a bonus, doing so means they still only have to clean one alchemist's pot to prepare it for another set of potions.

You can apply similar efficiency savings for weapons (What's that? This would give us leftover, unusable iron to make this one sword? Use that leftover iron to make another sword, rather than throw it out, while it's still hot.), that can make the savings on individual artefacts outweigh the costs of making an artifact out of one set of ingredients.

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    $\begingroup$ In other words, economies of scale. $\endgroup$
    – user161005
    Jul 13 at 3:19
  • $\begingroup$ In short, yes - but there's both a material economy at play and the labor economy at play - if I can make 15 health potions at the same time as an adventurer takes to make one health potion, the unit cost per potion can be lower, including the wage of the person making the potions, and the costs of the materials per potion, they can sell more for cheaper, or even water them down with cheaper materials/alloys that allow for more product for less materials. $\endgroup$ Jul 13 at 3:33
  • $\begingroup$ @user161005 which is the real-life answer to your question too. Specialised factories can extract way more value out of the same ingredients than a single worker. $\endgroup$ Jul 15 at 10:28
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Making the artifact isn't hard.

The materials are hard to procure, and the craftsmanship is time-consuming, but not particularly demanding of a particular skill level. The protagonist's time is better spent doing something he specializes in--procuring the materials.

In addition, the artifact may be like a Jedi lightsaber, where each user takes pride in the tradition of crafting his own specialized and individual version.

There may be several tradeoffs in the actual design of the artifact, which each user makes according to their own preference. Of possible use is mandatory customization, i.e., the finished artifact must be designed for a particular individual--think e.g. fingerprint-recognizing guns, but without the programmability.

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There are many reasons why it is more profitable to sell the reagents than the final product even if the adventurer has a higher skill and can make a better item.

  1. Failures: First and foremost is if it is possible to fail the adventurer would lose out on everything and not make any money. If there is a chance for failure why take that risk yourself? Leave the risk of failing to someone who crafts for a living.
  2. Time to craft: This is also another big one, will the adventurer be able to make more money harvesting more materials or crafting an item? Unless the crafting adds a lot of value they are likely going to make more from harvesting more materials instead of crafting.
  3. Equipment needed: Unless the equipment needed to craft the items is small, cheap and relatively portable the extra costs are going to add up. If the equipment is large and expensive the costs to store it and keep it safe are going to add up and eat into the profits. After all who is going to use or protect it when the adventurer is out adventuring?
  4. Uses for the items: Some of the reagents might be used for multiple items and may sell for better prices in different areas. As the adventurer travels they may find it to be more profitable to sell the reagents in areas where they are more valuable.

In the end the reason why it is more profitable to sell the reagents than a final item comes down to lost opportunity costs. In order for an adventurer to make an item give up doing something else. If what they give up doing could make them more money it doesn't matter how much the item would sell for because they still lose out in the end.

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  • $\begingroup$ Theoretically the risk of failure should be included in the price. Unless the adventurer has a higher-than-average risk of failure. $\endgroup$
    – user253751
    Jul 13 at 10:40
  • $\begingroup$ @user253751Building the costs of failures into the price only works if you are crafting on a larger scale. It doesn't matter if you profit in the long run if the failures from a few combines means you don't make or lose money on your current adventure. $\endgroup$
    – Joe W
    Jul 13 at 11:41
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Taxes and guilds

The production and usage of the artifacts is obviously a thing of importance for the economy, and therefore desirable for the nobility to have control over, so they made a deal with crafters. Crafters organize into guilds, follow regulations, and can therefore afford the luxury of selling their products with no drawbacks. But if you're not playing by the guild rules? Then you must pay for that. Quite literally. Various taxes and fees are applied to you in order to discourage people from making and selling artifacts outside of guilds control, resulting in you getting significantly less money from selling one. I've heard some governors crank the fees so high that you give up as much as 60% of the money made from the deal to the crown. And guilds are naturally very protective and all hush-hush about their methods and procedures (think glassmakers of Venice), so getting into one isn't trivial either - they very much do not like outsiders.

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  • $\begingroup$ I don't undestand the benefit that nobles have from this guild system. $\endgroup$
    – user161005
    Jul 13 at 3:56
  • $\begingroup$ Nobles control the guilds, who control the production of important items. The heads of the guilds are most likely are nobles. $\endgroup$ Jul 13 at 3:58
  • $\begingroup$ What benefits do nobles get from this control? Control in itself can't be a benefit. $\endgroup$
    – user161005
    Jul 13 at 3:58
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    $\begingroup$ @user161005 They get a cut of the money. Induction fees and training fees for people joining the guild. Maybe a yearly fee to stay a member of the guild. Plus the fees on anyone who isn't a member of the guild... Plus they have a captive market for any resources they have that are used in making whatever the guild makes, because obviously the guild buys from them first. Maybe they get first choice on buying stuff, too--if you are trying to buy some clothing but the nobles at the head of the clothing guild want fancy clothes, you are out of luck and will have to wait. $\endgroup$ Jul 14 at 19:40
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Most of the answers seem to assume that somehow the MC has the ability to actually craft the items, at some level. In many computer games at least this is simply not so. Perhaps you can make a few minor items, but actual artifact-grade enchantment is well outside of the game mechanic.

Morrowind for instance has a rich and exploit-laden crafting system, but even with the most blatantly over-the-top enchanter you can't produce anything truly potent. The best non-magical base materials in the game - high-end non-magical weapons and the like - will take only a relatively minor player enchantment, even though many high grade magical items are available whose apparent base item is low- to mid-grade. The artifacts in the game, even silly things like the Boots of Blinding Speed, are simply not possible for the player to craft.

The same is true in a lot of other games out there, where player crafting is more of a fun add-on to the hack-n-slash grindfest that is the base gameplay. Ooh, I can spend 1,000gp worth of hard to find reagents to enchant an item that gives less actual utility than just dropping the coin on a mid-level item? Let's do that, it'll be fun!

Especially when it comes to fantasy games, the lore is full of stories about ancient artificer clans - Dwarven smiths, Elven magecrafters, etc. - who have spent centuries or millennia honing their craft. Their apprentices are able to churn out magic items you can't even dream of... but then, some of those apprentices have been working for decades learning the secrets of that one item they're still trying to perfect. Your character isn't going to pick up that kind of skill in a couple of months of weekend play, or even several months of daily focus on just enchanting one item. At best you'll only ever be an amateur, a dabbler in the art.

Perhaps more relevant to the question is trade secrets. Every trade has them, and they're jealously guarded. All you have access to as a dabbler is the publicly available recipes, blueprints and what have you. Everyone knows that it takes powdered cockatrice bile, a steal at only 500gp per gram, to inscribe the empowering runes that defend against death magics... even though the primary supplier of gear empowered by those runes has figured out how to do it with much cheaper alchemical residue infused with a spell created by one of their researchers.

Crafting in games is - or at least should be - about balance. If the crafting system allows players to create abusively powerful gear then it will be abused mercilessly. Limit it too harshly and it will be just a cute side game that only a few will bother with. The balance mostly falls out around the 'useful but not overpowered' mark, if it isn't actively crippled to avoid uber-artifacts flooding the game and destroying the economics. Because nobody likes it when players create items that let them (or their friends) one-hit the game boss.

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  • $\begingroup$ The reason the answers assume the MC has that ability is because... the question states the MC has that ability $\endgroup$ Jul 15 at 10:32
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If you want a game case where you can sell materials and finished goods and that you have finished goods selling for less than the materials, with same ability of your manufacturing than of others and same access to materials:

Eve Online - most of stuff there is manufactured, and materials are mined. Reprocessing (now) gives less materials than was put in to make that item. There was a historic reason and 2 reasons remaining why sometimes ammo was cheaper than ingredients for making it:

  1. (main historic reason a decade ago): Noobs entering the game sometimes see manufacturing is the biggest money making machine, so they decide to mine the minerals, then use them to make the ammo to sell (other things require a lot of starting capital). But because they are so fresh they forgot to include mineral cost to the ammo cost as they didn't pay for it directly (only with time used for mining).

  2. Freeing tied-up money - you have billions of bullets you want to sell, and someone else also does, leading to a price war. If you wait with your pricing at break-even or with small profit and let the other undercut you, you have billions of money locked in that stock. Yes, you will eventually make profit, but you have opportunity costs too - this money could be used to make say weapons or ships to sell with much greater profit. So, sometimes you might opt to just dump your stock at below mineral price.

  3. Things have buy and sell price and you actually make profit by trading - median price is break-even or even a slight loss. You can instantly buy minerals for X or sell them for Y<X. Likewise for ammo. If you buy minerals and then make ammo and sell it, you lose money. But you can put buy or sell orders too - so, you put a low buy order on minerals and high sell order on ammo you are making and profit in the end (excluding scenario 2). Reason why you even need to manufacture is in volume of trade - usually, slightly more people are selling minerals directly to the highest buy order, and much more people are buying ammo from the lowest sell order.

Point 1 can be permanent - there is an idiot born every minute that believes loss on sale can be made up in volume. Point 2 cannot be permanent, as nobody sane would keep making this ammo unless they are just trying to mess with someone else. Point 3 can be permanent too - it happens incredibly often in real world.

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  • $\begingroup$ I don't understand #1 and #3 in your answer. "But because they are so fresh they forgot to include mineral cost to the ammo cost as they didn't pay for it directly (only with time used for mining)." What? " If you buy minerals and then make ammo and sell it, you lose money." Why? "But you can put buy or sell orders too - so, you put a low buy order on minerals and high sell order on ammo you are making and profit in the end" What? " $\endgroup$
    – user161005
    Jul 13 at 14:23
  • $\begingroup$ "Reason why you even need to manufacture is in volume of trade - usually, slightly more people are selling minerals directly to the highest buy order, and much more people are buying ammo from the lowest sell order." What? $\endgroup$
    – user161005
    Jul 13 at 14:24
  • $\begingroup$ @user161005 You mine minerals and in an hour get enough for say 1k bullets. You could sell those minerals for 10k. But fresh idiots sometimes forgot to add this 10k material cost to their price calculation (as they mined minerals themselves it was free for them - they didn't buy them), and they opted to sell the bullets for 9k - thinking they made 9k profit by selling bullets. $\endgroup$ Jul 14 at 5:27
  • $\begingroup$ @user161005 There are market orders, eg someone is selling 10k minerals for 100k of money, another is buying 10k for 90k of money. If you have 10k minerals, you can decide to directly sell that for 90k. But you can opt to put another sell order for say 99k. If someone is buying, they can either buy your order for 99k directly, or set buy order for say 91k. Etc etc. There is usually a ~10% gap between buy and sell orders that have meaningful volume - so if you are just buying outright, and selling outright, you are earning ~20% less than someone who put the highest buy and lowest sell order. $\endgroup$ Jul 14 at 5:35
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    $\begingroup$ @ZizyArcher: Note that the noobs actually did make 9k profit selling bullets. Yes, opportunity cost is important to consider if we want to maximize profit, but the argument that "you could have made more elsewhere therefore you're actually losing money" is invalid. There's always some other way I could have made more money than I am in real life, but that doesn't mean I'm going bankrupt. As long as my incoming money is higher than my outgoing money, I'm making a profit. $\endgroup$
    – MichaelS
    Jul 15 at 0:43
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There are special agreements between guilds that sell ingredients and guilds of professional crafters. Namely, they provide guilds of professional crafters with ingredients at low prices. In return the guilds of crafters buy enormous quantities of said ingredients, so this is win-win. This lowers supply of ingredients for people who are not professional crafters (this includes people who are not crafters at all, as many ingredients have consumer value as standalone goods), making prices even higher for them. For this reason market price of an artefact is lower than total price at which an adventurer can sell its ingredients.

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  • $\begingroup$ Wouldn't the crafters need to buy the same amount of ingredients regardless? And having an agreement to sell them at low prices would mean the adventurers would lose out on profit instead of make more. $\endgroup$
    – Joe W
    Jul 12 at 16:34
  • $\begingroup$ @JoeW "Wouldn't the crafters need to buy the same amount of ingredients regardless? " Professional crafters buy more ingredients as price is cheaper. "would mean the adventurers would lose out on profit instead of make more." Guilds of ingredients suppliers sell their ingredients exclusively to guilds of professional crafters. So it leaves place for ingredients market of out-of-guild crafters and people who use ingredients as final goods. $\endgroup$
    – user161005
    Jul 13 at 6:53
  • $\begingroup$ That isn't true at all crafters will make more money they more they make so they need to purchase as many materials as they can. Not only that at some point the price gets low enough that the adventurers lose money from selling them. $\endgroup$
    – Joe W
    Jul 13 at 11:39
  • $\begingroup$ @JoeW "That isn't true" What exactly isn't true? This is basic economics, prices go down - demand goes up. Crafters outside guilds wouldn't be able to get such low prices, so they would need to rely on ingredients from alternative, more expensive, sources, like adventures. So they would have to sell their artefacts at higher prices, which means that demand for their production will be lower than for in-guild-crafters. "at some point the price gets low enough that the adventurers lose money from selling them." They sell ingredients at different market, to out-of-guild crafters. $\endgroup$
    – user161005
    Jul 13 at 11:52
  • $\begingroup$ Yes they will try ang get prices as low as possible but are you trying to claim that crafters won't make items or make money just because they can't get items cheaply enough? They will just set the prices for the items they make based on what it costs to make them. Adventurers are not going to want to sell cheaply as it is likely costing them their lives to make and they will not be selling in bulk individually. They are going to want to find ways to sell for a higher price and only sell for cheaper when there is no other way. $\endgroup$
    – Joe W
    Jul 13 at 11:57

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