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I read over the Treasure parcel section of the DMG guide, and it's clear on HOW to hand out magic items, when, and how many per level, etc.

What I'm trying to understand is whether or not I should be slowly parcelling out treasure to fully deck out characters with a magic item in every slot, or I should just level up existing items/replacing them.

For example: One of my players, a level 5 Dwarf Barbarian, has a magic hammer, magic armour, magic boots, and a magic helm.

Over the next couple of levels, should I give him a neck item, hands item, arms item, and waist item to fill his slots out, and then hand out stronger replacements to swap out? Should I be replacing what he already has before then? How should I be handling this?

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Are you using the most recent errata, rules compendium, and DDI? –  Brian Ballsun-Stanton Dec 18 '13 at 4:18
    
Also, how skilled are your players? –  Brian Ballsun-Stanton Dec 18 '13 at 4:38
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5 Answers

DnD 4e was balanced around the idea that monsters have an AC around level+14, other defenses around level+12, attacks against AC around level+5, against other defenses level+3. There are slight deviations, Solos have more of everything, Soldiers have more defenses, Brutes have more Fort, less Reflex and attack, but these are the approximate numbers.

On the other hand, PCs should have attacks and defenses along the same numbers. They gain attack bonus equal to half their levels, +Attributes, +Expertise, +Proficency (if Weapon attacks) and +Enchantment bonus from the magic items. The same is true for AC and other defenses.

For this reason it is essential that they have the Enchantment bonus they should, otherwise the level appropriate challenge (according to the DMG) will kill them easily. This is not so big a difference in low levels, no magic or +1 is not a big deal, but +6 or +2 could mean life or death at level 27.

This means magic items are not a story element like in earlier editions, but as an integral part of a character as feats for example. So the question is not whether the Dwarf Barbarian should get a magic hand item, but rather why does he not already have a neck slot item, and how high is the bonus of his Weapon and Armor.

Some people, mostly those with roots in DnD 2nd edition, are not comfortable handing out magic items like candy at Halloween, and think magic items are a gift and something special.
If you are one of them, you should consider introducing the inherent bonuses as described in DMG2 and perfected in the Dark Sun setting book. It takes care of the numbers, and you can keep magic items rare and interesting. It is also a good guide to see what kind of bonuses PCs must have from Enchantment.

If you do not have access to any of these books, just remember to upgrade every main item (weapon/implement, armor, neck slot) after level 1, 6, 11, 16, 21, 26. If this is taken care of, you can give other magic items.

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Technically, replace or supplement. Realistically: gloss over boring equipment and hand out story treasure.

To strictly answer your question, every 5 levels, each character, in general, should be able to replace their entire wardrobe, like a blood-drenched high-society fashionista.

However, the majority of characters will have their "shtick." That "special" thing they do that iconically represents them on the battlefield. The brutal truth here is that a super=majority of the items in the game are worthless, and with the remainder only a subset are "useful" to any given character. You, as the DM, will (unless you're dealing with new players who refuse to do research) not actually know what those best items are.

The "traditional" fix to this is to ask your players to submit wishlists. This fix has never worked in any game I've ever played in. While I'm something of an over-achiever and happily work out wishlists, the majority of players that I've played with simply refuse to interact with the game outside of the game.

When I was running the game, as I tend to be extremely liberal with "fluff" (i.e. there is a huge split between the mechanical aspects of character and the narrative visualisation of character). Therefore, players in the course of levelling up could always choose level appropriate gear. (One uncommon level+1, uncommon of equal level, one uncommon of level-1 and common items with a value equal to an item of level-1).

However, I also liberally made up story "artefacts" (not in the uber-magic item sense, but in the iconic magic item that is representative of the players' choices in the game.) These artefacts are completely outside the normal "levelling up" economy and serve as tangible memories for the players without needing to be discarded in 5 levels because of the included obsolescence of the game.

While this results in significantly less treasure being "dropped" in the game (it's important to have hand-wavy treasure rooms in your encounters, but gloss over their contents unless its important to the story), it means that any item you give your players is because the story calls for it, and they handle all the mechanical paperwork of appropriate items.

If you must give your characters items because they don't know what they want, simply go to the appropriate handbook and roll randomly until something that's black or blue catches your eye. It's hard to go wrong and if your players don't like the item then they can invest more time into the game.

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This problem with 4E has lead to me just handing out whatever-the-crap and letting them hock/disenchant the things in search of stuff they really want. Also, the players read through the books and tell me things they want, and we make those secondary goals on their quests. As well as creating my own iconic items for characters specifically as you mentioned. –  DampeS8N Dec 18 '13 at 14:42
    
DampeS8N, this is one of the right ways to handle it. –  András Dec 18 '13 at 16:04
    
"the majority of players that I've played with simply refuse to interact with the game outside of the game." -- IMO, that's their problem. The campaign I'm in currently playing in has a Google Doc spreadsheet set up for players' wishlists. Two players (counting myself) have been making use of it, and whenever the GM gives out treasure, he considers the items on the list. Anyone else gets something comparatively generic that the GM feels would be useful to their niche. Everyone stays close in power, but the two of us get to better-sculpt our characters as desired. –  Brian S Dec 18 '13 at 17:35
    
@BrianS I can see where you are coming from, but I also understand why some players don't want to interact with a game that way. It feels metagamey whether it technically is or not, and it feels like the player is influencing the world in ways other than through their character, which some players dislike. It lessens immersion. –  TimothyAWiseman Dec 20 '13 at 17:27
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First Priorities

Weapon (and/or implement) then Armor then Neck Slot are the 3 major priorities (in that order) for magic items on PCs. Whenever you have magic items to give out to your players you should always consider if their current weapon, armor, and neck slot items are appropriate for their level. If so, then and only then, do you consider giving them something less integral like a foot or hands or arms slot item. Your players should be getting some gold as part of their travels and being able to buy common and uncommon items for the second tier slots like head, arms, hands, and feet should be something they can buy with their own money most of the time.

Wish Lists

An effective way to get both you and the player on the same page about items is to have your players make wishlists for their characters. Try to have them only pick items within 5 levels of themselves. You can then talk with each character individually about why they want what they want. Its up to you whether or not you give them everything off the list, but at the very least you and the players will have engaged in a discussion about where their PCs see themselves in 5 levels.

Want items that drive the story? Try Artifacts

More in keeping with previous D&D editions focus on magic items as rare, powerful, and extremely flavorful items are Artifacts. There are 55 artifacts total (Via online compendium) and each has unique powers and usually a quest or goal of some kind wrapped up in them. Artifacts work based on concordance.

Concordance

An artifact’s concordance score measures the artifact’s attitude toward its wielder. The scale ranges from 0 (angered) to 20 (pleased).

When a character takes possession of an artifact, it starts with a concordance of 5. (The owner’s race, class, or other characteristics might adjust this starting concordance.) Various actions and events increase or decrease this score as long as the character possesses the artifact. When the artifact is pleased with its wielder’s actions, its concordance goes up. When the wielder acts contrary to the artifact’s desires, its concordance decreases.

It is this concordance that allows the artifact to influence the story as concordance falls there are usually bad things that happen to the PC who holds it or the party as a whole, but as concordance rises it increases in power.

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I think that you shouldn't give the players what they exactly need, but a random magic item with an appropriate level. Think about it realistically, would the barbarian really find the only slot left. Life is life and they don't get exactly what they want. : )

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Welcome to rpg.se! Please take a look at the about and the help center; they're a useful introduction to the site. This answer would be improved by an edit addressing how this "realistic" approach to item distribution impacts play in the 4e system (which is very concerned about balance, operating on the assumption that characters be well-equipped with level- and character-appropriate items), perhaps with suggestions on how to deal with any challenges arising from the change. –  BESW Apr 8 at 1:21
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What I especially enjoy doing for players in a game, as far as handing out treasure, is I determine what their 'thing' is. The archer loves his bow, the barbarian loves his axe, the wizard has a crossbow they're really fond of, and the rogue loves to have a billion little cheap magic items.

So what I do is I combine (A) constantly replacing their main item... (the archer finds a better bow by killing the archer who was shooting at him) (B) Upgrade their main item... (the barbarian helps a spirit of the northlands who offers to add freezing burst to his father's axe) or (C) random tables. The random tables are fun for helping them to discover neat stuff or have randomly beneficial items they'd never have planned themselves, but also allows them to have that one special magic item that they particular enjoy. I don't really worry too much about them having balanced gear aside from their one or two main, signature items.

This last part, however, is the part where I loved 3rd edition, and I'm not too sure what the 4th ed rules on magic item crafting is: but I also have a cast of NPCs for them to interact with, and one of those NPCs is always some sort of magic item crafter for them to make use of, if they don't have a PC who does item crafting - so a lot of the 'random treasure' ends up converted into stuff they actually want.

Which brings me to the last part - I don't just give them finished magic items. I also give them ingredients. They can use dragon scales to make magic leather armor or to make a cloak of resistance. They can use royal honey to make healing potions or to make a poisoned blade. That sort of thing. Give the players some of the control over their stuff, and actually ties them to the items even closer. When it's not just 'you found a dragon hide cloak' but 'This is the cloak made of the hide of the red dragon you slew with that lucky crit at just the last minute' they develop more of an attachment to the item.

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Random loot is not a good strategy in 4e where power progression is closely tied to the PCs getting items they intend to keep. –  wax eagle Dec 18 '13 at 15:44
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@WolfmanJoe It resembles a tabletop MMO to an outsider, kinda like a foreigner hearing Portuguese might mistake it for Spanish—both impressions are superficial and really wrong. 4e could be called a tactical-combat storytelling adventure game. I dislike it strongly, but it's very good at fulfilling its valid design goals. –  SevenSidedDie Dec 18 '13 at 16:07
    
"I'm not too sure what the 4th ed rules on magic item crafting is" -- magic item crafting in 4e boils down to: pick the Ritual Caster feat (free for Wizards), buy a Ritual Book (free for Wizards, 50g for others), and buy the Enchant Magic Item ritual (175g). Then spend 1 hour and the cost of the magic item to create it. There's a little bit more to it, but that's the gist. –  Brian S Dec 18 '13 at 17:45
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