In one of my long-term PvP LARP games, we've done a lot of work trying to balance the system we're using, either by banning certain "classes" or "powers" or by altering their specs slightly to make them less "overpowered" so that people who choose to go this route don't have an automatic advantage over the other players. At what point does the crusade to provide balanced powers and whatnot for all types of characters tip over into nerfing cool wooj to the point that the players spend more time missing what they don't have available anymore than enjoying what's left? Essentially what strategies can you use to balance a game fairly while keeping it fun for everyone?
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It's possible to balance an RPG. How much work you want to spend doing it, or how important you think it is, is up to you.
The thing to remember about balancing an RPG is that you're working with a mechanical rules system. In order to achieve game balance, codify the rules, as if it were an ordinary board game, and figure out how each power or character build plays out. Most RPG authors are so interested in the theme of the game that they don't spend a lot of time thinking about the nitty, gritty mechanics of the system.
I would strongly recommend looking to video game balance as a model. My experience is that competitive online games are almost universally better balanced than tabletop RPGs. This is because the nature of the medium makes balance more important, and imbalance more glaringly obvious. You can play 4-8 League of Legends matches, each one consisting of dozens of individual battles, in the time it takes to have one battle in D&D. Consequently, it's a safe bet that LoL is better balance-tested, even if D&D has been around for years.
An article on gamasutra that might be of use to you: http://www.gamasutra.com/view/feature/2843/applying_risk_analysis_to_.php
A couple of important points:
One of the tricky things about RPGs is that the game encourages you to bend the rules. If you want a truly balanced game, you have to curb this tendency, and let the characters' powers dictate how well they fare in an encounter. If you introduce things like movable scenery, hazards, et cetera, make sure they have codified rules, and they're considered in the game balance. Since there's no way to simulate everything out there in the world under one rules system, you'll have to make judgment calls about fairness versus freedom to improvise.
Balance in Roleplaying games is an illusion. It doesn't truly exist.
Even in Tabletop, using point based systems, balance is illusory. The best balanced game out there is probably Hero System 5E. But, given 100 points and no character disads, I know guys who will be pulling off 16d6 ranged killing attacks, and others struggling to get 6d ranged killing attacks. And I know guys who will do more with those 6D attacks than the guys with the 16D attacks...
In LARP, the issue is even worse.
In non-contact LARPing, it's pretty much the same issue as Tabletop gaming - some will make better use of the mechanics than others. But, because so little is resolved mechanically, the charismatic and/or brilliant players will get much more accomplished.
In Boffer LARP, some people are inherently better at the various physical actions than others, so any balance in the combat mechanics is usually much overwhelmed with the various skills of the players.
The only real test for class balance is the standard three-fold test for Tabletop:
I substantially agree with @Aramis's answer. There are some important caveats though.
Balance, in a LARP, is not about power. Balance is about activity. Make sure everyone's choices allows them to provide a real contribution to problems they choose to be able to solve. No one player should obscure many other players at what they choose to do.
The critical thing to accomplish in your balancing act, especially if adapting from a table-top RPG, is to remove "I win at everything" abilities. The beauty of a socially focused larp is that characters who win at combat are useful and marginalized. Allow people to "win" at combat, but make sure that they require the other players to function.
Having played in a 3.5 derived larp for a couple years, the first thing to do is to not play in a 3.5 larp. Barring that, don't allow all the sourcebooks.
Instead, find a minimal set of rules that allow players to express what they want to do. Players express what they want to do by showing that their characters are good at those activities. By having simple rules, there will be less conflict between those who choose to read the rules and those who don't. By avoiding splatbooks, you avoid the rules-based aggrandizement that people who are willing to invest the time into system mastery almost naturally get.
Have simple, flexible rules that can handle all manner of conflict, rather than martial combat, and that prohibit anyone from winning at more than one thing, and you'll have a solid basis for a larp.
Boom! I was just writing on (a smaller factor of) this today, and it comes up again.
Balance requires balance.
As funny as this sounds, it's something we often don't consider. For balance to work, we have to consider intraclass, intrarole, and intracharacter balance, a trifecta of parts that go from large to small. It's important to consider exactly how balance will work without thinking we know it.
Intraclass balance strictly refers to specific outcomes. Can one guy built with a high Pistols skill compare to another guy built with a high Pistols skill? Many games do this by managing abstraction, but some will provide differentiated but (hopefully) equivalent pathways to accomplishing the same goal.
Intrarole balance refers to a specific type of activity. Typically, the focus of this is combat. The general rules of this in terms of balance are that there are several methods of achieving an end-goal. In traditional combat, this means damage, defense, attack rate, attack coverage, and health. A sorceror's fireball may do good damage and have an area of effect, but takes more time and can't be used as often as a fighter's standard melee attacks (I'm analogizing to D&D here; the question you're asking is game-design based and can be difficult to translate to LARP).
Intracharacter balance refers to all types of activity holistically. If your game is focused heavily in a certain area of play, characters will need to be able to be competitive in that way (D&D, for instance, has all player characters be adventuring/combat focused). If not, you need to consider if you want characters to all have identical intrarole balance or if it's okay to allow them to have separate roles that are not necessarily performance-equivalent.
You want to figure out what's the core element of your game and what players will want to have be an outcome. When crafting a game, for instance, you may need to include a mechanical consequence for failing in certain areas. I'm working on a Gothic fantasy game that has a penalty for bad social standing just as penalties are granted for being injured or stunned. Why? I want people to have to focus on social interactions, and if that means they have to either keep a dedicated talker to keep the group and its members from falling too far into disrepute or each be able to prove their valor and honesty, so be it.
Another thing to consider that I've seen in my studies is that a lot of games fall into a fallacy of reward variables that are extrinsic to play; this doesn't necessarily hinder balance, but it's something to consider outside of simply "who does the most damage in combat". For instance, in D&D characters often wind up using a lot of magical items, but some builds can't take advantage of this. These characters will lose a chance to shine if they can't compete with the winners of the dump truck lottery or they don't have intrinsic benefits to make up for the external assistance of magic tools.
Similarly, in your LARP, is it strictly combat, or are there certain goals? One thing I'd consider is studying something like Counter Strike or Flashpoint and looking at how in an environment filled with guns and knives the best solution is often the least violent one; sneaking past the bad guys, picking open a locked door, or talking down an enemy is superior to combat, and depending on how deep you go in mechanical modeling you can consider things like that.
Balance does not equate to bland. Though you might conflate balance with equality or sameness, really balance is more that each character class, skill, treasure, power, etc, has strengths, but is balanced by providing a commensurate weakness. That weakness does not have to be direct, but can be from a cycle derived imbalance.
Think about the simple game rock-paper-scissors, and ignore the 'meta-game' strategem that you know that alice always picks rock. There is a cycle where paper > rock, rock > scissors, and scissors > paper. That simple game has balance. Each game element has (ultimate) strength (rock > scissors), and (ultimate) weakness (paper > rock). Expanding the game by adding lizard and spock, and you gain a much more complex game, but with the essential balance preserved. Not a balance of equality, but a balance of opportunity.
Every Rpg and yes, that includes Larp, can have cyclical balance, but the problem is that it takes playtesting, willingness to change and be flexible, and a certain analytical bent. Many folks who play Rpg are analytical, but most Rpg and Larp gamers are very creative. And though analytical and creative are not opposed, they are independent.