When making an item, is it allowed to salvage other items to reduce the cost?

Question

Say I am an artificer (base class) and I am crafting a magic item for which I need 600 GP worth of raw materials. It doesn't state what these materials need to be- Just that it should be worth 600 GP. I have a magic item with me worth 1000 GP. This means that its craft cost entailed 500 GP worth of materials. Could I 'salvage' this item and earn 500 from it to use on my new item? Or, even better but less likely, would I be able to get the full price?

Answer 1

The Player's Handbook on Item Creation Feats on Raw Materials says

Creating a magic item requires costly components, most of which are consumed in the process. The cost of these materials equals half the cost of the item.…

Using an item creation feat also requires access to a laboratory or magical workshop, special tools, and so on. A character generally has access to what he or she needs unless unusual circumstances apply (if the character is traveling far from home, for instance). (88)

Despite this description saying that creating a magic item expends only most of the raw materials, every Player's Handbook item creation feat says specifically that raw materials are used up by the item creation process, hence leaving behind no raw materials and creating finished goods—the resultant magic item.

This means that unless the DM rules that magic items are raw materials for another magic item's creation—and I've not heard of a DM making such a ruling—, a magic item can't be used as raw materials for one or more other magic items. (Some special abilities like the benefit of the feat Ancestral Relic (Book of Exalted Deeds 39, 40), however, provide alternatives.) For example, it's typically impossible to use 20 divine scrolls of cure light wounds [conj] (PH 215-6) (1st-level spell at caster level 2) (25 gp; 0 lbs.) and 10 arcane scrolls of cure light wounds (1st-level spell at caster level 2) (50 gp; 0 lbs.) as raw materials for a phylactery of faithfulness (Dungeon Master's Guide 264) (1,000 gp; 0 lbs.).

So anyone—not just an artificer—that wants to create a magic item probably needs actual raw materials to do so. The nature of these raw materials depends upon the campaign. The DM here has vast leeway.

• The DM can rule that raw materials are specific to a certain magic item. For instance, if a creator wants to create a phylactery of faithfulnessthe creator needs to buy 500 gp of phylactery of faithfulness raw materials. There can be no substitutions. A creator that changes his mind about making a magic item after buying the raw materials but before creating the magic item can sell back the raw materials (presumably at full price).
• The DM can rule that raw materials are specific to a particular item creation feat. For example, a scribe can buy 100 gp of raw materials for the item creation feat Scribe Scroll (PH 99-100) and draw from that supply of raw materials whenever it comes time to scribe a scroll, not worrying that what's needed is instead raw materials for a divine scroll of cure light wounds (1st-level spell at caster level 1) for the creator's druid spell and completely different raw materials for an arcane scroll of cure light wounds (1st-level spell at caster level 2) for the same creator's bard spell.
• The DM can rule that raw materials are just raw materials and completely interchangeable. For example, a creator that invests 1,000 gp in raw materials can use those raw materials to create a phylactery of faithfulness, 20 divine scrolls of cure light wounds (1st-level spell at caster level 2), and 10 arcane scrolls of cure light wounds (1st-level spell at caster level 2).

Other possibilities abound, of course, and the DM can mix these and others depending on the feat, setting, or whatever—I can imagine a setting wherein raw materials for the feats Craft Magic Arms and Armor and Scribe Scroll are (probably separately) universal for those feats, but a creator must buy raw materials for other magic items specifically, and one magic-rich town sells generic raw materials that can be used to create any magic item. While that sounds to this DM really complicated, this player knows where his PC would visit frequently.

Note: The Eberron Campaign Setting base class artificer's supernatural ability retain essence (32) only allows the artificer to destroy a magic item to add item's XP cost to the artificer's craft reserve. No gp is gained from using the ability retain essence.

Answer 2

Ultimately, a lot of this is going to come down to the specific circumstances of the campaign, characters, and the items in question. There are no answers that apply in all cases.

Bare Minimum: Given a large enough town, you should be able to “salvage” the item for materials equal to half its value

Where a “large enough town” is defined as one large enough that you can readily find a buyer for the item you own, and a seller for the materials necessary to make the item you want. Then you can just sell the item you own, taking half its value in hard currency, and buy materials you need with that currency.

Specific cases may do better or worse than that

The sell-what-I-have-and-buy-what-I-need approach should be work in every campaign and for every pair of items, if you can find that “large enough town.” But a campaign may not have any town large enough to buy or source materials for some particular items, and there may be other problems with this approach. In campaigns that are particular sticklers for realism, just transporting sufficient hard currency to buy the materials for a high-level magical item becomes quite prohibitive (a hundred thousand gold pieces is a literal ton of gold). There may be cases where the item you have is literally worthless for the purposes of making another item, because it cannot be sold at all.

On the flip side, the DM is free to rule that some of the components of the item are more directly useful than their raw sale value for creating some other specific item. Maybe they rule that a major component in a particular staff is a large, magically-imbued crystal—that happens to be the same sort of crystal used in the wand you have, so if you just pry that off (destroying the wand), you could use that as a big portion of the staff. Or maybe your chain shirt can be used as the chain portion of your full-plate, so you can just use it as-is and add plates over it (so its full value counts against the cost of the full-plate). Whatever. But all such cases are purely up to the DM on a case-by-case basis.

No class offers features that help significantly here

The artificer comes closest with retain essence, but retain essence only helps paying for the XP costs of magic items, not the gold cost. Besides the artificer, there really is just nothing relevant for this process out there.