As an exercise in world building, I started to look at the 50% difference between the market price and raw materials price of magical items. And stared to think, where would this money go if someone opened a shop and started making items close to full time. There must be some huge overhead costs in this industry, let's start brainstorming them:
1. Tax;sales and property tax from the Authority Having Jurisdiction. 10%-40%
2. Security; hired guards, protection money to thieves, hiring adventurers to deal with extreme threats, planar bound guards. Personal protection for the crafter.
3. Payroll; the crafter and owner will have decadent lifestyles, sales staff will take hefty commissions.
4. Property; a real magic shop may look like a luxury car dealership, huge budget put toward architecture and esthetics. Huge budget toward static security measures.
5. Advertising;?
6. Stock Shrinkage; try as you may, stuff will go missing.
7. Interest; assuming Shakespearian banking, this entire investment is on borrowed money from Shylock. Let's say 5%-20% interest on assets.
What else do you have?
Considering how potent these items are, you may have to purchase a license to deal in items like this. (Like a gun dealership). Also, if you magic items in large quantities than you may fall under political control. Kingdom A might get angry when you start selling to Kingdom B or accept a +1 weapon contract for Kingdom C's army. In these cases you may have to pay off officials and keep everyone happy.
3. Payroll; the crafter and owner will have decadent lifestyles, sales staff will take hefty commissions.
I think you overestimate the amount of sales you'll be making. The crafter and owner will probably not have decadent lifestyles, since the number of potential customers able to plop down 16,000 gp for a +4 belt of strength will be very small. Even the number of customers able to plop down 50 gp for a potion of cure light wounds will be fairly small, when you consider that a typical person earns 1 gp per day or so. That potion is two months salary, and that's one of the cheapest things in the shop.
To put it in perspective, think of a new car dealership. There are about 20,000 new car dealership in the United States, and new car sales average about 15 million per year, so call it 40,000 cars per day. That means that your average dealer sells two cars per day. According to the department of labor, those 20,000 dealerships employed about 220,000 people, so that's 11 people per dealership.
E.g. a typical car salesman sells one car per week.
Although the profits on individual items may be high, the actual return on invested capital is relatively low. This is true for car dealerships and would also be true for magic item shops.
A person who made items full time would be able to supply a consortium of shops.
It may also be advantageous for local governments to encourage Magic Shops with patronage or tax exemption. Having a source to equip your palace guards and army locally would simplify a lot of things.
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I think you overestimate the amount of sales you'll be making. The crafter and owner will probably not have decadent lifestyles, since the number of potential customers able to plop down 16,000 gp for a +4 belt of strength will be very small. Even the number of customers able to plop down 50 gp for a potion of cure light wounds will be fairly small, when you consider that a typical person earns 1 gp per day or so. That potion is two months salary, and that's one of the cheapest things in the shop.
3. Payroll; the crafter and owner will have decadent lifestyles, sales staff will take hefty commissions.
...yeah, the economy is a bit weird. By all right, almost no one would ever be able to buy magical items, and the whole 'supply kindom B with +1 weapons' thing would fall to the wayside since it would be better to simply take the same money for one weapon and hire like....500 guys with free clubs and slings for a month. Even if you equip them better then that... strength in numbers beat out the tiny bonuses of low level magic items.
The +1 weapons would only go to nobles as a status symbol and a symbol of station (And even then it would likely be out of pocket). Heck, even most of those would probably be hand-me-down....I mean heirlooms passed down the Armstrong line for generations. (I also got away from myself there too).
I always though it might be better to assume upper middleclass people might have the funds of a 3rd level adventurer (obviously not the training, since they need you). That would be enough to explain why potions are so available when the actual, wonky economy would normally only allow one per household in case of an emergency (so maybe...20 in the whole village normally).
Let's stay away from the macroeconomics of the pathfinder world, down that path leads pain and misery. And there are many threads about that already. Let's keep imagining one store that moves enough traffic to employ a crafter full time. Or a franchise.
When a player sets up shop in a metropolis how will you justify the profession roll of profit a week? I want to inform the archetypal entrepreneurial player that the king is demanding a 30% sales tax with a 10% licensing fee and that the dwarves just placed a trade embargo on diamond dust so the price of raw materials just jumped 25% percent.
Let them suffer from insufficient advertising, so all they get are locals that don't spend and money, or friends of a friend that expect discounts and store credit.
That kind of production will require some large stock unless you do by commission only. Will this shop take half the commission cost up front, or all of it? Or are there banks that will guarantee the purchasers credit, not all customers are rag tag adventures, many will be kings, churches and merchants.
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When you think about it, magic item shops are basically arms dealers, that sell military-grade heavy weaponry to murderhobos adventurers without any background checks or licencing system in place.
They have to keep stock. Given that an untrained laborer makes 1sp per day, or 36.5gp per year, a single +1 weapon is worth about 60 years wages.
So you have to worry about desperate people with no education and nothing to lose, trying to rob your store.
Security costs should be enormous.
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I think you overestimate the amount of sales you'll be making. The crafter and owner will probably not have decadent lifestyles, since the number of potential customers able to plop down 16,000 gp for a +4 belt of strength will be very small. Even the number of customers able to plop down 50 gp for a potion of cure light wounds will be fairly small, when you consider that a typical person earns 1 gp per day or so. That potion is two months salary, and that's one of the cheapest things in the shop.
3. Payroll; the crafter and owner will have decadent lifestyles, sales staff will take hefty commissions.
...yeah, the economy is a bit weird. By all right, almost no one would ever be able to buy magical items, and the whole 'supply kindom B with +1 weapons' thing would fall to the wayside since it would be better to simply take the same money for one weapon and hire like....500 guys with free clubs and slings for a month. Even if you equip them better then that... strength in numbers beat out the tiny bonuses of low level magic items.
The +1 weapons would only go to nobles as a status symbol and a symbol of station (And even then it would likely be out of pocket). Heck, even most of those would probably be hand-me-down....I mean heirlooms passed down the Armstrong line for generations. (I also got away from myself there too).
I always though it might be better to assume upper middleclass people might have the funds of a 3rd level adventurer (obviously not the training, since they need you). That would be enough to explain why potions are so available when the actual, wonky economy would normally only allow one per household in case of an emergency (so maybe...20 in the whole village normally).
1 shadow (or other incorporeal monster): your 500 guys are dead meat.
Plenty of monsters that can't be beaten without the use of magic.Even something with DR/5 magic is a tough opponent for a common warrior without a magic item.
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I will try to make a better post alter (gaming will start in less than a hour), but the best seller for a magic shop are low level potions/scrolls, inks for writing spells, enchanting materials and such.
Remember that a caster can make a single magic item in a day, so that 50 gp potion will require 2 hours of work but it will be the only item you can craft in a day. Same for a scroll. All the other magic items and potions/scrolls worth more than 250 gp will require a full day of work.
So the income isn't so high.
Then there is the problem of taxes. Medieval taxes aren't based on sales (generally). It is fairly hard to track someone sales with the methods available in a medieval world.
They are based on the perceived income of a activity, based on what that kind of activity make, and on value of the building/stock.
So probably our shop owner would be taxed for 10-15% of the value of his stock every year, on top of some kind of license tax to stay in activity.
And he will be taxed every time he move merchandise in another city (generally you ad a customs house at each city gate).
A way to avoid that was to be a noble or to work for a noble (they were often exempted for taxes, but had to pay for troops, castles and some kind of tithe to the king and the church), or to work in some free city where the tax system was more lenient.
Essentially. it can be done, but it require work.
Actually, according to the game's Run a Business rules, it will only run you about 1,590gp to purchase such a shop outright, or about half that to have one built yourself.
'Cause, who really cares about all that other hard thinking stuff? ;P
1 shadow (or other incorporeal monster): your 500 guys are dead meat.
Plenty of monsters that can't be beaten without the use of magic.
Even something with DR/5 magic is a tough opponent for a common warrior without a magic item.
Depends, really. It would be cheaper and more efficient to hire a low level cleric or wizard to just cast magic weapon on a dozen guys weapons when something like that occurs. And it is generally a good idea to keep such people on retainer since, as you said, a lot of things can't be beat without the use of magic.
And scrolls and potions are also options that are cheap, and they can be kept in a bottom pocket until such an unlikely situation occurs. Is it going to be more expensive in the longrun to keep on using consumable items like that? Possibly. But not as expensive as replacing that +1 longsword when it gets looted off a soldier's corpse after they get ambushed by a band of brigands twice their number.
Then there is the problem of taxes. Medieval taxes aren't based on sales. It is fairly hard to track someone sales with the methods available in a medieval world.
They are based on the perceived income of a activity, based on what that kind of activity make, and on value of the building/stock.
So probably our shop owner would be taxed for 10-15% of the value of his stock every year, on top of some kind of license tax to stay in activity.
And he will be taxed every time he move merchandise in another city (generally you ad a customs house at each city gate).
Great, the kingdom places an arbitrary tax based on what they think they can pay or they recieve sponsorship from an influential noble and end up making a sword for him for every four they make for themselves.
I do like the arms dealer idea more the the car dealership, anyone know how an arms dealer's overhead breaks down? I'm predicting mostly security, bribes, defaulting clients and theft.
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Another thing to consider is the adventurer or multiple adventurers coming in and placing weapon A and/or armor B on the table and asking for a specific enhancement bonus added.
Just think of liquor stores in that the bigger and more well funded magic stores are going to have a wide variety and range of stuff to buy. They will probably have a go to person that they will reference you to if you need a potion/scroll of a spell that is very specific.
Like stated above, a magic store is also going to sell consumables that spellcasters will need in casting spells and writing.
The way I would do it rich would be to set up a one stop "truck stop" if you will along a heavy traveled road. Along with the low level casters to make mundane everyday items, I would have high level casters to do enhancement casts to specific items. There would also be a pawn shop where you can sell stuff you have found/raided. With the need for security/protection, it might develop into its own city or empire.
I do like the arms dealer idea more the the car dealership, anyone know how an arms dealer's overhead breaks down? I'm predicting mostly security, bribes, defaulting clients and theft.
I doubt that the real world will provide much of a useful example; the arms industry is rather highly regulated and the weapons that you can buy without regulation tend to be relatively inexpensive and, frankly, verging on the black market (e.g. gun shows). A potion of cure light wounds still costs the equivalent of two months gross salary for your average person; a simple +1 weapon costs nearly six years gross salary. Buying a shotgun at a gun show or at the Wal*Mart is one thing, but if you think that you can roll into General Dynamics and ask to test drive an M-1 Abrams Main Battle Tank, you are mistaken. There is a whole slew of high end arms that are basically only available to people with special licenses and the manufacturers and dealers take that licensing seriously.
That's obviously the not the model Pathfinder/Golarion uses (although perhaps it should be, although I could see it being difficult to enforce because a single caster can make a vorpal sword, in contrast to the huge foundry it makes for a main battle tank or heavy naval gun).
My understanding is that most of the costs for arms manufacturers like General Dynamics is in labor and materials; who the hell is going to steal a tank? Even small arms manufacturers like Arsenal generally don't have the kinds of issues you describe. They have a huge factory, turn out rifles by the thousand, and then sell them in job lots to distributors who typically turn around and re-sell them either to organizations such as police departments or to retailers. So while theft and defaulting clients is always an issue in any business, it's actually more of a problem for the retailer than to the manufacturer.
The arms dealer who buys the thing would have more security issues, since he's dealing directly with the public, but at this point you're back to roughly the same business model (and issues) that you'd be handling with any high-end expensive merchandise. So we're back to the car dealership as a model, additionally hampered (in the real world) by the substantial licensing issues that you don't really have with cars.
3. Payroll; the crafter and owner will have decadent lifestyles, sales staff will take hefty commissions.
I think you overestimate the amount of sales you'll be making. The crafter and owner will probably not have decadent lifestyles, since the number of potential customers able to plop down 16,000 gp for a +4 belt of strength will be very small. Even the number of customers able to plop down 50 gp for a potion of cure light wounds will be fairly small, when you consider that a typical person earns 1 gp per day or so. That potion is two months salary, and that's one of the cheapest things in the shop.
To put it in perspective, think of a new car dealership. There are about 20,000 new car dealership in the United States, and new car sales average about 15 million per year, so call it 40,000 cars per day. That means that your average dealer sells two cars per day. According to the department of labor, those 20,000 dealerships employed about 220,000 people, so that's 11 people per dealership.
E.g. a typical car salesman sells one car per week.
Although the profits on individual items may be high, the actual return on invested capital is relatively low. This is true for car dealerships and would also be true for magic item shops.
A person who made items full time would be able to supply a consortium of shops.
Not everyone working for a car dealer is a salesperson.
Not everyone working for a car dealer is a salesperson.
3. Payroll; the crafter and owner will have decadent lifestyles, sales staff will take hefty commissions.
I think you overestimate the amount of sales you'll be making. The crafter and owner will probably not have decadent lifestyles, since the number of potential customers able to plop down 16,000 gp for a +4 belt of strength will be very small. Even the number of customers able to plop down 50 gp for a potion of cure light wounds will be fairly small, when you consider that a typical person earns 1 gp per day or so. That potion is two months salary, and that's one of the cheapest things in the shop.
To put it in perspective, think of a new car dealership. There are about 20,000 new car dealership in the United States, and new car sales average about 15 million per year, so call it 40,000 cars per day. That means that your average dealer sells two cars per day. According to the department of labor, those 20,000 dealerships employed about 220,000 people, so that's 11 people per dealership.
E.g. a typical car salesman sells one car per week.
Although the profits on individual items may be high, the actual return on invested capital is relatively low. This is true for car dealerships and would also be true for magic item shops.
A person who made items full time would be able to supply a consortium of shops.
Yes, I know. I was unclear. The number I cited was for the number of salespeople employed.
Actually, according to the most recent BLS numbers, there are now more than 350,000 automotive salespeople in the US, but some of them work in the used-car industry, of course. The second largest group in the industry is of course technicians and mechanics.|
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The "supermarket" model for magic items rankles a bit. The way I'd do it would work more like this:
- Cheap, broadly useful stuff is always in stock. Every shop sells healing potions and wands of CLW. As a shop you can be certain there'll be demand for it.
- There might be a +1 weapon of a common weapon type in stock, in case someone needs those for emergency slaying of monsters with DR. If you want a nonstandard weapon, ...
- The shopkeepers also know all the crafters, and the other shops. If you want something they can't get off the shelf, they'll know who has it or who can make it. And they'll broker that deal, for a modest commission.
- People also come to the shopkeepers to sell stuff. The shopkeepers therefore keep a list of people with the money and interest to buy unusual or powerful items that suddenly come on the market.
Basically, for anything beyond bog standard items, the shop is more a brokerage than a shop. But them knowing everyone there is to know is really convenient.
Also, if you try to rob one shop, they'll all warn each other. The professional network of magic shops is also a special interest group with good connections to the society's elite, who need magic items for their would-be-adventurer/knight/court wizard sons.
The "supermarket" model for magic items rankles a bit. The way I'd do it would work more like this:
- Cheap, broadly useful stuff is always in stock. Every shop sells healing potions and wands of CLW. As a shop you can be certain there'll be demand for it.
- There might be a +1 weapon of a common weapon type in stock, in case someone needs those for emergency slaying of monsters with DR. If you want a nonstandard weapon, ...
- The shopkeepers also know all the crafters, and the other shops. If you want something they can't get off the shelf, they'll know who has it or who can make it. And they'll broker that deal, for a modest commission.
- People also come to the shopkeepers to sell stuff. The shopkeepers therefore keep a list of people with the money and interest to buy unusual or powerful items that suddenly come on the market.
Basically, for anything beyond bog standard items, the shop is more a brokerage than a shop. But them knowing everyone there is to know is really convenient.
Also, if you try to rob one shop, they'll all warn each other. The professional network of magic shops is also a special interest group with good connections to the society's elite, who need magic items for their would-be-adventurer/knight/court wizard sons.
Hmm... maybe with the 'no unusual or powerful items in the shop itself' idea could be expanded further by adding in a magic crafters' guild with a good network.
Basically, anything higher than your standard +1 stuff should be kept in a vault in a separate location. And because most shops would not even need much of a stock of things like that, maybe the vault would serve as the storage house for the whole guild comprised of a few dozen shops across the entire kingdom.
This would allow them to more easily fortify the stock against thieves (hey, it is the place where ALL of the kingdom's most powerful magical equipment passes through between creation and sale; I doubt anyone would mind a bit of 'testing' on idiots trying to break in). A bit of teleportation and the like would allow shopkeeps to get the goods back to clients in a timely manner (and for the kinds of prices we are talking about, it would represent very little of the overhead to do so).
This also represents an excellent adventure hook. I mean, just about any rogue general planning a coup d'tat would be very, very interested in getting that vault in its entirety for his small army, and the king would be very interested in paying some 'specialists' to protect against such threats.
Mildly relevant:
http://www.nuklearpower.com/2009/12/05/episode-1200-shack-sounds-too-cheap/
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The bigger shops will probably have the special materials like mithril, adamantine, darkwood, etc on reserve for those with the gold and request along with a crafter or two specified in weapons and armor.
I would possibly have a way for spellcasters to make some gold by creating scrolls and/or potions as I have need during their down time. There would also be a library of spellbooks and space wizards could rent to learn spells.
The higher level enhancement casts are more specific per wielder so beyond the normal +1 weapon, I would have staff capable of casting such bonuses in a very short amount of time. I would have the rings of protection and amulets of natural armor of various bonuses in stock so a simple switch is made.
Not all magic shops are arms dealers.
In one game, I had a character set up shop selling magical convenience goods. A brush that cleaned clothes magically, a spoon that could flavour water, stuff like that. Items that are both practical, and cheap to produce. Part of her boutique was a showroom for magical clothing. Not one item she sold was useful for harming anyone.
Then again, I ignore the "items can only be sold for half price" idea anyway.
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@Liam: it's always nice to have good relations with the local nobles.
However, if you can reliably obtain +3 weapons, it means you have access to a (roughly) level 9 spellcaster. Maybe you ARE that spellcaster. You're not exactly a common peasant that's easy prey for predatory nobles.
These people have, and sell, military grade weaponry to people with dubious morals. You can try to squeeze them, but it's not as easy or safe as squeezing peasants. If they get too upset, they might hire some PCs to kill you, payment in magic weapons.
I'm beginning to think that magic arms dealers might actually become a sort of Military-Arcane Complex that has significant political influence, due to the amount of money they handle and the dangerous people they know.