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If a player is to create a magic item that can cast spells but because they do not have the specific spell they want to use a spell they already have. However, I am not sure how to scale this properly.

For example, the Wand of Magic Missiles has 7 charges and each time you cast magic missile (level 1 spell) it costs 1 charge

So at first it seems as though 1 spell level is 1

The Staff of the Magi can cast fireball at 7th level for 7 charges which matches the charge costs for the Wand of Magic Missiles.

So if a character in a high level campaign wanted to swap out a spell from the Staff of the Magi, for Finger of Death for example, would it cost 7 charges or should it cost more as a scaled up fireball is a lot weaker than an actual level 7 spell.

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Gauging from the lists on all the staves with which I have read the pattern seems to be one charge per level of the spell slot used to cast the spell. If you look at the Fireball 7th level(7c) version and the Wall of Fire(which is a level 4 spell it takes 4c) stands to reason that Finger of Death would take as many charges as the level in which you would want it cast.

To your point there is not much of a power discrepancy between a lvl 7 Fireball and a Finger of Death since one is single target and the other is AoE so potentially the Fireball can cause much more damage overall.

There seems to be a discrepancy on the Conjure Elemental ability though, it states 7c to use but this could be an error and is intended for the casting of at a 7th level slot.

There is no hard RAW details on this but it is extrapolated from the staves.

Wands play by different rules obviously. They cost one charge for the base cast and in the case of some like Magic Missiles (DMG 211) as you mentioned it costs an additional charge to add the equivalent of a spell slot to the casting.

One other thing to consider is the length of time to create a legendary item is quite long. If you go by the guidelines from the DMG it would take a single caster greater than 54 years to create a Staff of the Magi. DMG p129

500,000 / 25g per day = 54.795 years. This is prior to the optional rules in Xanathar's Guide to Everything on crafting.

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The official sources have no guidance on this, and are inconsistent

The example you use, the Staff of the Magi, does not follow any clear rules about its charges. For example, it has 7 charges of Conjure Elemental (5th level), 7 charges of Fireball (at 7th level), but only 2 charges of Knock (2nd level).

As an aside, I would imagine that higher level spells should have fewer charges, as they are more powerful.

The only guidance in the DMG on creating magic items states (referring to a table on page 285):

This column of the table indicates the highest-level spell effect the item should confer, in the form of a once-per-day or similarly limited property. For example, a common item might confer the benefit of a 1st-level spell once per day (or just once, if it's consumable). A rare, very rare, or legendary item might allow its possessor to cast a lower-level spell more frequently.

That's as much as you get on the number of charges.

Make cost scale with charges

If you're having players make magic items, you might run into the problem that the items are too powerful. For example, if a wizard casts fireball a few times every day, and makes a wand of fireball, they're effectively getting free spell slots from the wand. Additionally, allowing them to make the item themselves means that they can tailor it to be much more powerful for their character.

The DMG provides no guidance on how magic items are made, so I'm assuming you have some homebrew rules for that. I'd suggest that the cost, whatever it may be, scales exponentially with the number of charges. A 1-charge wand might cost 100 gp, but 2 charges might be 200, 3 charges might be 400, 4 charges cost 800, and so forth. One of my DMs builds magic items this way, and it works to make magic items that are useful but not overpowered.

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Damage comparison

First of all, depending on your DM style, a massive-single-target damage spell might seem more powerful than an AoE spell.

I would take this into consideration when balancing your homebrew items. If your players fight mostly against single bosses a Finger of Death means in average about 50% more damage than a 7th level Fireball. As soon as you have two or more enemies next to each other, the Fireball drastically increases in damage output with each additional enemy.

Both spells use commonly resisted damage types, have a "strong" saving-throw (Dex, Con & Wis) and are according to the "Spell Damage table" (DMG p.283) close enough to the damage they should have at 7th level. Fireball does exactly 12d6 damage as the table recommends. Finger of Death deals 62 (7d8+30) average damage, which is close to 61 (11d10) but has a more reliable damage range.

So according to the DMG they are both damage wise in the perfect range for a 7th level spell. One dealing 50% more damage against a single target, the other one dealing 37% more total damage as soon as there are two targets and more than double as soon as there are three targets.

Other effects

But we have to consider two more things here:

  1. The Finger of Death is basically always usable. There is no tactical behaviour required by your melee based teammates as it is with the Fireball.
  2. The Finger of Death has an additional effect besides its damage. It may rise killed targets as permanent zombie slaves for your npc. Being able to cast this spell once per day at assuming 7 charges (your recharge 1d12+1 charges/day) means that your player will have an army of zombies later on, which might not be relevant for his power level when he has a legendary item, but it's still a benefit above the damage).

In conclusion

In an objective way I would set the cost to 7c. The spells are both damage spells and according to the DMG balanced for what they are. The minor benefits of Finger of Death are easily compensated by the area of effect from the Fireball.

Subjectively you might have to consider that a boss enemy would take in average 20 damage more if he is targeted by the Finger of Death, so keep in mind how often your players fight against solo monsters.

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So if a character in a high level campaign wanted to swap out a spell from the Staff of the Magi, for Finger of Death for example, would it cost 7 charges or should it cost more as a scaled up fireball is a lot weaker than an actual level 7 spell.

A 7th level spell uses 7 charges. I agree with you that scaled-up spells are often less powerful than spells of an equivalent level, but the core mechanic here is spell level = charges used.

Now all that said, Staff of Magi isn't just a staff and doesn't need to follow the rules if you don't want it to. I would argue that it probably shouldn't. Make a wondrous item that does all this cool stuff, then also use it as an infinite-charge staff and pick what spells you want in your new blasto-cannon is, well, over-powered. Customizing its spell loadout should be insanely expensive (eg: it could raise the charge cost of all spells, or just the nonstandard spells; or lower the max charges held). It's up to the DM to exercise discretion here, but it would definitely be appropriate.

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