Would this house rule for trade goods be unbalanced or cause problems?

Question

The PHB rules say this about trade goods on page 144:

Trade Goods. On the borderlands, many people conduct transactions through barter. Like gems and art objects, trade goods—bars of iron, bags of salt, livestock, and so on—retain their full value in the market and can be used as currency.

This simplifies things: when adventurers find a pile iron ingots or a sack of salt, they can sell or trade them for the listed price per pound given on the trade goods table on page 157 PHB. No complicated math needed.

However, if I am a merchant and trade in or buy trade goods from the adventurers, I have to store them, pay rent for my shop and storage, and spend my time reselling them, all for no profit. This is different from buying and selling other goods and equipment, where merchants normally buy at half price, and resell later at full price. I would have no apparent incentive to buy any trade goods from the adventurers.

I do understand that D&D is not an economics simulation, and that the game is not really set up to deal with this. But I dislike how this rule makes the world feel fake, I’m trying to fix this, so that merchants have a logical reason to buy trade goods from the party. I am considering to house-rule trade goods differently¹:

Instead of fetching full value when sold by the adventurers, trade goods sold by the characters will only pay out 80% of their listed value.

Obviously, this would lessen the value of such goods found in published adventurers. Would this cause any problems or significant imbalances?

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^{1 This still would not explain why trade exists. If I am a trader and buy a wagonload of linen in one town, and travel overland or sea and sell them in another town for the exact same amount of money back I had to spend on them (or even for 80% of that if one did also apply this to NPC merchants), there is no margin to justify the activity. The trader will be losing money, for feeding his oxen, paying off and maintaining the cart, paying guards, shelter and sustenance along the way, never mind levies, taxes etc., imposed by local authorities. Nobody in their right mind would do any trading. But for such off-screen economics, as a DM I can just declare that the traders can buy those goods much cheaper, close to the production price, and still sell them for 80% of the end-customer selling price to shopkeepers, while making a profit after accounting for risks and transport cost. It has no direct impact on the player characters.}

Answer 1

That rule is attempting to simulate informal currencies for greater verisimilitude.

In a fairly hamfisted way. But salt, especially, and to a lesser extent other things (rice, iron, raw gold) have been used as currencies in the past to a very large extent in that other goods were measured by their worth in salt or what have you, people paid in salt, etc.

If you want the economics of that to make more sense for greater verisimilitude, allow these goods to be sold for full price in less developed regions ('the borderlands'), and at the same time hike the price of those goods in those regions. You want to buy salt with [gold coins] in Laria, Capital of the Empire? Sure. Listed price. You want to buy salt with [gold coins] in Crapsville, Crap County, Crapland population 20 barely alive humanoids, 1 merchant total? It costs double the price. But you can sell it for the same price you'd buy it in Laria.

That will generate a far greater amount of verisimilitude than arbitary %'s and follow the intent (if not the actuality) of the rule in the PHB.

Answer 2

This isn’t a house rule. This is just giving out 20% less trade goods.

Players generally aren’t buying trade goods, so will typically not even notice a difference between buying and selling. Except sometimes diamonds, which they aren’t selling when they find them, they’re likely saving them for use as spell components. Your question is equivalent to “what would happen if I gave out 20% less trade goods?”

Nothing. Nothing would happen. Except your players would have a little less cash.

Answer 3

The PC’s aren’t selling to merchants; they’re selling to the same people the merchant’s are

The value of a trade good (or as modern economics refers to them, a commodity) is not in the good itself but in what the buyer will use them for. Bars of iron become swords or ploughshares, bags of salt become hams or pickled herrings, livestock becomes meat, milk, wool, and, of course, more livestock.

In today’s economy, the price of commodities is set by supply and demand, not be the cost of production or transport. Manufacturers and merchants can’t charge whatever they like, they can only charge what the market is willing to pay. If that means they can’t sell at a profit then some of them (the least efficient) will exit the market (one way or another), supply will be reduced and prices will rise. Then more people will enter the market, supply increases and prices fall.

When the PCs buy and sell trade goods they are price takers, not price makers. They are accepting the price the market dictates as is the merchant who just trekked halfway across the kingdom. For simplicity, the game assumes that these prices are invariant across time and space which, for the purposes of a game representing high fantasy rather than merchant caravans is close enough.

A far simpler and easier to manage mechanic is to keep the commodity prices the same but limit the amount that can be sold per month in a community based on its size. A hamlet might have a market of one bag of salt per month, a large city might have a market of 10,000 per month.

Answer 4

NPCs do not have to follow the same rules PCs do and can use different prices.

Why does that merchant sell goods to you at listed price? Because he got them cheaper. He is part of a trading network supplying iron from dwarves to the lowlands.

Why does that merchant buy goods from you at the listed price? Because he knows where to sell them for a comfortable markup. There is an island nation without any sources of iron. They will pay more for it.

Why does that shop buy wood at listed price? Eh, it is the market price, if not from you, they would buy it at the same price from a shop down the street.

Why does that shop sell wood at that price? They bought it for lower price. If you do an advance payment for a certain amount of wood before cutting even starts, you can get it cheaper, you know.

Why can't the party do that?

Because they are not merchants. Dwarves can sell you iron...for a nominal price. Sorry, their bulk discounts start from 100'000 gold pieces spent per year. That island nation? Nominal price. You are not member of the XXX nation merchant guild, right? Inflated prices are actually an informal way of paying off that country so it will not be overly aggressive in military, economical or political dealings. Woodcutters? Sure, pay now, be ready to accept all wood in 2-3 month. If you are not ready the moment we are back in town, deal is off and you will have to pay the difference with market price, if you still want your wood.

Business is a time-consuming practice, which is ill-suited for adventurers. Unless your game is based on running a business or trading, it is better to let traders get better deals in background, away from PC path and leave players with knowledge that they can convert 10m³ of accumulated gold into bag of gems and back without losing a penny.

Answer 5

This is unlikely to make it feel more 'real'

This changes the game from 'I can sell 100g of iron bars to anyone for 100g' to 'I can sell 100 g of iron bars to anyone for 80g'. In pre-packaged modules this would be deleting money that the players are expected by the designers to have. If the GM, you in this case, do not account for this your players could be underequipped for the later section of the module (Fewer purchased/crafted consumables. Less upgraded equipment if you let your players purchase magical equipment).

The reason this feel fake and gamey is because the players understand that buying or selling something for the same price anywhere to anyone is gamey. Similarly buying/selling at the same ratio everywhere is similarly unrealistic and gamey.

It seems to me that the existing rule of trade goods having a flat price represents the PCs optimizing who they are selling to (see section 3). Considering how much 5th edition tries to simplify everything, the existing rule makes sense. Replacing it with a more complicated rule makes sense at some tables (such as yours), but would likely still feel gamey without a lot of legwork put in, or building some custom spreadsheets/programs to do the heavy lifting. Keeping it as a simple one line rule, however, would not be sufficient to make it feel less like a game.

Markets

One option would be saying this city is a buyers market for some goods, and a sellers market for other goods. That farming village? Makes lots of flour. You can buy for super cheap, but can't sell high. You got silk? The general store is willing to pay top dollar because they know they can resell at a premium here, but if you are looking to buy you will be paying more.

You shouldn't have to model buying and selling the same goods at different prices, because your players likely won't be selling piles of goods and then turning around and immediately repurchasing from the same store. The area price for iron right now is 110% base regardless of you buying or selling, and because your players are unlikely to both buy and sell iron right here right now, they will never know this.

Another option would be to differentiate between a supplier/reseller and an end user

The traveling merchant or general store, yes, would incur overhead for storing/transporting mystery product until they can resell it. This cost would have to be covered by buying low/selling high. They would purchase using this 80% rule.

The end user does not have any extra overhead. The blacksmith already has to buy iron bars, and already has a place to store them. The baker has a pallet to store his salt and flour, the butcher already has meat-hooks. Their storefront overhead is covered not by purchasing the base goods for cheaper (though that would help), but by selling the goods they manufacture from the product at a higher rate. (An example would be the blacksmith buying two pounds of iron for the market price of 2sp, and selling the resulting two pound shortsword for 10gp). If the end user doesn't have someplace to store the goods, then they don't buy. Their storage probably closely correlates to how much they can forge/sell/consume before it rots/rusts into uselessness.

Monetary goods, such as bars of gold, would also go for a flat rate. They are effectively money. 'Overhead' would be the merchant putting it in the strongbox next to their coin if used to purchase, or replacing the coins that they were exchanged for if your players want to trade it for coin.

Other valuables such as gems and art are a weird case. Gems can sometimes be monetary goods, sometimes be used to make jewelry or other artwork, and sometimes be used as components for spells. Is this individual an end user for the art, purchasing it to permanently keep it, or is this individual a speculator looking to resell it at a higher value.