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This has been driving me crazy as I've been trying to create monsters and NPCs for my characters to encounter in D&D 5th Edition. Say I've got an NPC with 48 hit points and Armor Class 16. That would put it in the hp range for Challenge Rating ¼. The instructions say, "If your monster's AC is at least two points higher or lower than that number, adjust the challenge rating suggested by its hit points up or down by 1 for every 2 points of difference." The suggested AC for a CR ¼ monster is 13, so I'm supposed to raise the CR by 1. But what does that mean? Raise it by 1, the numeric value, or raise it by one step? In other words, is its defensive CR ½ or 1¼?

Let's say for the sake of argument that it's CR ½. Let's also say that this NPC does an average of 21 points of damage per round and has an attack modifier of +6. The dmg/rd value is in the range for CR 3; the attack modifier suggests that I should adjust the CR upward by 1, for an offensive CR of 4.

And now I'm supposed to average the defensive and offensive CRs to get the final CR. Am I supposed to average the values: (½ + 4) ÷ 2 = 2¼, rounded down to 2? Or am I supposed to average the steps, choosing CR 2 because it's halfway between CR ½ and CR 4 on the table? (The result is the same in this case, but it often isn't when one of the recommended CRs is 0, 1/8 or ¼.)

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It's one step, not one.

It doesn't make sense otherwise. Say you want to design a Turtle (for someone's familiar) with low HP and high AC. HP doesn't get lower than 1 (1d4-1) and you decide to give it AC 15 to represent its hard shell. Taking it through the calculation process, the HP says it's Defensive CR 0, but because the AC is 15, you should add 1, does it suddenly become a Defensive CR 1 creature?

No, the turtle becomes a Defensive CR 1/8 creature and assuming it's Offensive CR is 0, it becomes a Final CR 0 (although it is a relatively strong CR 0) creature.

Rounding CRs is up to you but you should be looking at the table, not the numerical.

Between a Defensive CR of ½ and an Offensive CR of 4, averaging them numerically yields 2¼, as you say. Problem is, the step from ½ to 1 isn't numerical, as it is counted as a whole step (see above) in the table but only half a point, numerically.

What you should be doing is looking at the table and see what CR falls between both the OCR and DCR. In your case, it's 2 (between ½ and 4).

It gets complicated when you average the Final CR and not get a number just in between. Like OCR 2 and DCR ¼, is its Final CR ½, or 1?

I would go ahead and advise you, in a case like that, to make the Final CR rounded up (to 1). It's almost always better to overrate your creature's CR so you don't accidentally perform a TPK.

This brings us to out next point:

Calculating the Final CR isn't the final step, playtesting is.

DMG page 273 says:

Creating a monster isn't just a number-crunching exercise. The guidelines in this chapter can help you create monsters, but the only way to know whether a monster is fun is to playtest it. After seeing your monster in action, you might want to adjust the challenge rating up or down based on your experiences.

Pit your custom monster against a generic party, see how they fare. Especially when you're experimenting with custom creature abilities (or, really just any abilities in general) you should playtest. You might find synergies between abilities that may make the creature tougher or you may find this particular ability isn't very fun. It's part of the process. You also may never get the difficulty just right. Don't worry about it, change things on the fly and make it up as you go. Good Luck!


As a sidenote:

Setting the OCR and DCR too far apart results in swingy and unpredictable creatures which might one-shot a PC in a single attack but dies when it sneezes or a creature that's just too tough to hit but doesn't really pose much of a threat damage-wise.

As advised by theangrygm as linked by minnmass in the comments, try to keep it between one or two steps apart from each other.

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