Why is this less profitable for an adventurer to craft and then sell an artefact, rather than to sell ingredients needed to craft the artefact?

Question

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.

Answer 1

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.

Answer 2

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.

Answer 3

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.

Answer 4

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.

Answer 5

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.

Answer 6

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?

Answer 7

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.

Answer 8

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.

Answer 9

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).

Answer 10

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.

Answer 11

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.

Answer 12

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.

Answer 13

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.

Answer 14

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.

Answer 15

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.

Answer 16

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.

Answer 17

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.