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Suppose you're playing an RPG with item creation rules that require you to spend experience points as part of creating the item, such as D&D or Numenera.
Suppose further that your gaming group has house-ruled experience points out of the game and the GM tells everyone when to level up as befits the story.
How can you still make it cost the players something to create items, when they don't have experience points to expend?
Several house rules can be used for crafting if experience points have been eliminated by another house rule.
Change the Experience Point Costs to Time
In a time-sensitive game, this can be more hurtful than spending experience points. Addressing D&D 3.5 specifically, making every 200 XP of a magic item's creation cost add another day to its creation time means high-powered items take a long time to craft.
In a deadline-oriented campaign (e.g. King: "You have 2 days to stop the apocalypse!" PC: "Um... could you make it three? I'm almost done with this wand"), high-powered item creation is essentially impossible, restricting PCs to the creation of the occasional trinket. In such a campaign, unless sometimes given long stretches of downtime (perhaps between adventures or via limited access to a time-dilated plane), players might feel cheated if they picked abilities allowing item creation.
Change the Experience Point Costs to Money
In a stingy game, this can be more hurtful than spending experience points. Addressing D&D 3.5 specifically, making every 1 XP of a magic item's creation cost add 5 gps to its creation cost means high-powered items take a fortune to craft.
Combine Other Alternative Costs with Partial Crafting
Use this option alongside expending another alternative resource (such as either of the ones above) and permit craftsmen to make items that are only partially functional or partially charged. Addressing D&D 3.5 specifically, calculating the cost of a partially-charged staff or wand is trivial, but an item that is normally usable a number of times per day might instead be usable only a number of times per week depending on how much of it has been completed (e.g. a half-finished cape of the mountebank (DMG 252) (10,080 gp; 1 lb.) functions 3/week but no more than 1/day). To be clear, this is risky. DMs should consider the implications seriously (e.g. PCs needing but 1 charge from the staff of dimensional lock save vast amounts of cash or time over crafting a fully-charged staff of dimensional lock), and items that function constantly should be required to be finished before they function at all lest rules quirks be exploited, but it's an option to include if other methods become too restrictive.
A campaign could use of this and the previous two options (therefore time, money, and functionality), lending credence to the adage that craftsmen can make something good, fast, or cheap, but rarely more than 2 out of 3.
Distribute Experience Points That Can Only Be Spent
Use the game's experience chart and determine an appropriate percentage of that amount that's free experience points for crafting. Addressing D&D 3.5 specifically, when a character gains a new level, subtract the amount of experience points needed to reach the next level, and distribute a percentage of that either immediately or upon gaining that next level (in the latter case, however, characters won't have crafting XP until level 2). I suggest somewhere between 1 and 10% is sufficient, although a series of homebrew feats could reasonably enable more, or house rules for those with multiple item creation feats would allow more (2% per item creation feat seems reasonable).
An Aside
My D&D 3.5 homebrew advancement rules (currently used in two ongoing campaigns, both over a year old) have players track the number of sessions in which their characters participate, gaining a level upon finishing participating in 6 sessions. A player can choose not to advance his character 1 session in exchange for 1/6 the experience points needed to advance from the character's current level to the next level; the player can then spend that XP on what his character needs it for (e.g. crafting magic items, casting spells). It's worked just fine. Although essentially a different way of handling of experience points (1 "point" per session and 6 needed to level up) instead of a wholesale elimination of experience points replaced by leveling up via DM fiat, I share because any DM who uses any kind of different method of experience point distribution (instead of by-the-book or level up by fiat) will need to determine how to deal with experience points as currency, and this is how I've been doing it.
Don't.
This is probably the most cop-out of all cop-outs, but you could always just avoid the problem by not including the experience cost of crafting magical items at all. Rule it out, and allow wizards to pay the cost and build as many magical items as they wish.
Be careful in using this cop-out, since it will encourage mass-production of magical items (assuming you don't strictly enforce time constraints) or break the economy (if a wizard tries to pull something cheap like mass-producing 1,000 level 1 magic missle wands and selling them), though personally I'd question where a wizard can find a willing buyer for 1,000 magic missile wands realistically, but that's getting off-topic.
Long story short - if you think your group can be trusted, just do away with the EXP cost of crafting magical items.
Whitehack provides my favorite answer to this question. Casting normal magic costs hitpoints. They heal. The crafting of magic items costs permanent hit points. They do not heal. But in that game, you reroll your HP every time you level (and only take the new value if it's greater).
This provides a per-level limitation which doesn't have the same mechanical profile as XP cost but it's similar and elegant enough that you might want to adopt it for another game.
Game impact: It totally makes sense then, that a wise character (that is, one who has access to "miracles" (magic)) engaged in crafting items will attempt to actually create these items as she nears a level-up. Whether that character is then able to level up risk-free once their HP are depleted is a matter of luck and the GM's skill and agenda. I don't think this is likely to be a significant exploit because it has an "old-school" (I have qualms with using this term, but if you read generously I think we'll all be on the same page) ethos that I think bears on this issue in two way.
First, if the players are crafty about manipulating the universe, then they deserve to reap benefits.
Second, killing "monsters" produces a relatively minor portion of the XP that characters collect. Treasure looted from dungeons is the largest portion while "mission" rewards and vanquishing monsters each make up relatively small chunks. The GM has tremendous power in implementation though, so it's largely up to their preference and skill and the table's mode of operation. To provide a reliable risk-free source of rats (or similar xp-fountain) would, I think, be sloppy use of the game, under most circumstances.
Players Give up something else of value
Giving up XP means you're not leveling and gaining access to spells, spell slots, feats, class features etc. By using xp to craft you are indirectly sacrificing these gains. Skip the middle-man and make players give up one of the above when they craft an item.
Players start with a limited number of crafting uses Each player only gets X times to craft items. This would need to be balanced by player crafted items leveling with players so it did not feel like a punishment.
Players lose other physical resources Gold/money being the most obvious cost, but other more intangible costs such as using up connections/favors could also apply.
If you want to be as mathematically close to core as possible but just don't want to tally up xp for encounters (who does?), simply keep track of how many points they spent of magic items this level, and when the time to level up comes, generate a random value to determine if they get that level. For example, it takes 3000xp to get to level 4 from level 3 (D&D 3.5). If the player spent 500xp on a magic item, they now have a (500/3000)=1/6 chance of not getting the next level. To be nicer of course, you could just make this a delay rather than a full denial, but personal experience says to not cut the xp cost. Players who are good sports won't intentionally try to break it, but it starts to not make sense why the world isn't full of cheep magic crap, and the cleric gets more and more tempted to start putting that 3000 extra gp into 60 cure light potions, and there is really no reason not to.
You could let players with item creation feats 'disenchant' other magic items or sacrifice spells in exchange for 'Mana' that could be used to craft new items. Perhaps use a formula that's something like ten points per caster level worth of magic item disenchanted and one point per spell level of spells sacrificed to fill the Mana Pool. Then, declare Mana costs are equal to the experience costs already listed in the rules.
This way players still have to work towards getting enough Mana to craft that next magic item, but they can also recycle outdated gear or get a boost from loot nobody wants.
The added incentive to reserve spells each day to fuel this Mana pool will also give players an incentive to think creatively about how to do more with less, which can be fun and challenging.
In our group we eliminated XP from 3.5 D&D for spells and magic item crafting by substituting certain "magical reagents" for the XP cost. We use the following table of reagents based on the Spell School:
These reagents are then magically consumed in the item creation process, transferring their essence to the new magic item in lieu of the caster's essence. (XP)
The amount needed for items with a listed cost (like gold) is equal to the XP cost times 5 in gp. For example, you need 80 XP for a +1 enhancement to a sword (a Universal spell, having no listed spell school) then you multiply 80 by 5 to get the 400 GP total needed, so buying 8 pounds worth of pure gold will get you that +1 enhancement. Finding things like 8 pounds of pure gold can sometimes be an adventure in itself, just to go buy it. (Of course, if the players have that much gold in loose coins and want to be boring, that can work too.)
For items with no listed price, it's equal to 1 pound of magical reagent per 25 XP cost. So to make a Monk's Belt (Mod. Transmutation, cost 13k gp, 520 XP) you can use 15 pounds of Black Dragon's blood, a pound of lead, and five pounds of Brimstone and Henbane. That requires the players to go out and adventure to get those things, so the players are "paying" the XP cost in time doing something other than getting rich, famous, etc. If they want to abstract this part out, it takes 1 day per 25 XP, (so 21 days, on top of the 13 days crafting time for our Monk's Belt... 34 days lost) where time passes and it's assumed they get the items... and nothing else.
If the spell also has a sub-school or descriptor, then the XP must be split equally among all, using additional tables for those. (mostly it's just common sense for what items will work for which sub-school or descriptor) So an Enchantment (Compulsion) [Mind Affecting] spell like Charm Person needing 2,240 XP to craft into an item needs 90 pounds of Tin, the dead body of a Succubus, (a creature with Charm abilities) and the tail of an Aboleth (a creature with a Mind Affecting ability). So the players go on a quest for these items and after returning (and buying the 28,000 gp worth of supplies and waiting an additional 56 days) their Wizard can craft the Eyes of Charming that the Bard wanted.
This system is play-tested and works well to prevent market flooding, while eliminating the penalty that artificers run into just by doing what their character was made to do.
[rant] The justification from WotC as to why XP is required doesn't stand up to scrutiny when you look at things fairly. Penalizing artificers for making magic items at a discount doesn't explain why the Fighter with the +3 Longsword of Keen Wounding that the artificer made for him (and then gave him at cost) isn't penalized XP for having it. Even if the artificer only sells to his party at full retail and loads up on magic items for himself, then if the DM is holding characters to Wealth by Level (by adjusting the treasure they get as the DMG advises they do... I mean, has any DM ever used the "build price" of an item to determine character wealth instead of the "full retail" price? I hardly think so...) then the artificer is going to get less treasure than the rest of the party does until their wealth is equal anyway... so where's the discount? [/rant]
Anyway, I know this hasn't been active in a few months, but I hope it helps someone!
Pay for the xp cost of new magic items with xp cost in other magic items that you may gain over the course of your game. The game says you can only use half the resources of an old item to create a new one; instead of using half the materials and half the xp, they can just use the entire xp-half and discard the salvageable materials.
Afterward, you can cover up for any minor shortages with XP from the players themselves, which shouldn't hinder them too much. That way, they get the magic items they want, but lose the magic items they already have (this also helps deal with the unwanted magic item issue better than 'HEY, TOKEN WIZARD SHOP IN FRONT OF THE DUNGEON, BUY THIS PLZ').
Leave the XP-only system in for players who are still willing to sacrifice their XP for an impressive magic item; allow the exchange system to supplement this, and cut out some of the creation time due to the XP cost already being available.
May or may not require some house-ruling, but who cares. It's smarter and fairer this way, and nobody actually loses anything, they just have more options to choose from.
