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So looking at milestone leveling it basically says you level up when the DM determines it is time to level up based on a major accomplishment event etc.

How does something like a multi classing penalty or XP cost for creating a magic item or casting a certain spell fit into that? Does milestone leveling basically mean I grant a specific amount of XP after a milestone? Or is there no xp calculation at all and thus no penalty for multiclassing or xp cost for crafting an item?

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I haven't been able to find a RAW answer on this, so I'll just tell you how I've handled this in the past.

  • For multiclassing, I just ignored the penalty.
  • For crafting, I gave the characters a certain amount of accrued xp per level (I think it was 25% of the xp it would have taken to reach that level the normal way) that they could expend for crafting without leveling down or delaying levels.

Here's why - to me, the purpose of milestone leveling is to:

  • Simplify the process of tracking xp
  • Allow leveling to feel like a reward for a meaningful accomplishment (rather than being 400xp short at the end of the dungeon and having to wait until the next minor fight).
  • Allow control over how fast the party advances
  • (for some parties) Ensure all players are at the same level

Trying to account for multiclassing or crafting penalties would conflict with those purposes. It goes back from being simple to being a nightmare (I'm honestly not even sure how you'd manage a multiclassing penalty in that system). It also removes the aspect of meaningful accomplishment: "You all level up after escaping the temple of doom! Except you - because you're multiclassing, you'll level up partway into the next adventure".

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No one should ever use the multiclass XP penalties for any reason. They fail to achieve their stated goal, and that goal is a bad idea in the first place. This is whether you use milestone XP or not.

As for crafting, what I do is convert the XP cost into a gp cost: 1 XP is generally worth 5 gp. When crafting, items cost 1/25 of the base cost in XP—converted to gp, that would be ⅕. Adding this to the ½ of the base cost that crafting usually costs, and you end up with crafting costing 70% of what it would cost to buy the item in the store. This savings still seems quite good to me.

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