Introduction

The economics of Shadowbane can be a very mystifying thing because it is a very flexible and detailed system. Most games that I have had experience with have an overall money situation that they call an "economy" but it is a sort of server wide phenomenon and the players do not really have a great deal of control over it, beyond their personal transactions.

The Shadowbane world, on the other hand, does not offer one single economy. It offers one single set of rules, but several different economies, each surrounding a player controlled city. Money does pass between city economies on occasion, but the core fuel that makes every city run is the efforts of the locals. These economies must be managed wisely by the players because a city can be either successful or unsuccessful, fun or miserable, depending almost entirely on the economic policies of the city's leadership.

What this means to the average person is that Shadowbane is truly a place where the players are making the world. When making a judgment about an economy, it is more appropriate to look at the management first and consider THAT against the game's overall mechanics. No two player controlled cities will be approaching the mechanics in exactly the same way. Some may be more desirable to a particular type of character or player than others. Ultimately, a player's comfort level is very heavily influenced by the leadership of the city he or she is part of. It is not automatically the games fault if they are not having fun.

Concepts

The Shadowbane literature on the economy describes 3 basic types of transactions. Production transactions, net zero transactions and value sink transactions. To sum them up briefly:

Production: Transactions that are concerned with bringing new value into the economy by looting it off of computer controlled mobiles, either as gold or as items worth gold. The only time gold, or value, is ever created in the Shadowbane world is when these mobiles are killed.

Net zero: Transactions concerned with the passing of wealth around within an economy rather than adding or subtracting it. Many times wealth is mistakenly seen as being created when, in fact, it is just changing hands. Net Zero refers to an exchange. A sword costs 100 gold. Someone gives the sword owner 100 gold, the sword owner gives them a sword. The net for each person is Zero, they neither gained or lost anything. Things get a little less obvious at the individual level when profit is involved, but even transactions that involve prices higher than an items worth are considered net zero because, in the bigger picture, wealth has still just moved around. Nothing is gained or lost in the WORLD.

Value sinks: Transactions that actually take wealth out of the economy and the world. When a trainer or a building is upgraded the money goes "poof" and can not be recovered. When trainer salaries and building maintenance is paid the gold vanishes. When a siege weapon finally wears out, a building is destroyed or a recall scroll is used, or equipment begins to wear, value is disappearing.

I would add one additional term:

Economic flow: This would be concerned with the amount of movement and circulation value is actually going through within a given community. This is, to a great extent, the results of decisions made by a city's leadership.

A city has 4 basic services that allow it to manage it's economy and they are all interdependent on each other:

1. Trainers: This is where every citizen ultimately goes to become more efficient. Even bare naked citizens must visit trainers to improve themselves. The more your citizens visit these trainers, the more powerful they become, the more wealth they can ultimately generate for your economy when they hunt. Some of the money spent on training goes to the trainer's building strongbox as profit where it can still circulate, some of it vanishes down a value sink as an "expense" of training the skill. Trainers require a great deal of wealth for upgrading in order to teach the highest skills in their class. They also need facilities which require upgrades and maintenance and salaries for their services. This all adds up to a great deal of value being wiped away if it is all abandoned or destroyed, and a good deal of additional value vanishing regularly as it is all maintained.

2. Pawning items: Citizens must often "harvest" item drops that they find to get gold they can use on other things. The city shops will purchase items from players with money from the shop strong box for an adjustable fraction of the items actual worth. The shop can then either stock the item for resale at a better profit, or recycle it for it's full value in gold and keep the difference between what they paid and what it's worth. If the raw gold being created in the fields is much less than the value of items being dropped, the purchase amounts that a city's shops offer will have a direct effect on the average citizen's comfort levels. Pawning items is one of the most economically feasible services in a city. Tradesmen and buildings do not need upgrading to purchase and resell items.

3. Selling crafted items: It is often difficult for individuals to find everything a character needs from monster drops or from trade with other characters. The shops in a city can create items on demand and have them available 24/7. They pay the full value for these items out of the strongbox when they are created and then sell them for an adjustable amount more than that. The better equipment your citizens have the more efficiently they can use their skills to bring additional wealth into the economy. Unfortunately, you also need to pay huge upgrades and maintenance fees to own a shop that can craft the best items.

4. Repairing items: Items wear down, and as they do their value goes down with them. The wear of an item is considered a value sink because value is leaving the world as it wears. The repair of an item is considered net zero, however, because value is only exchanged. The customer is purchasing a fraction of a weapon for gold. The repair shop gets gold, the character gets value back in the weapon. Nothing is lost. The cost of repairing a durability point is equal to the cost of creating the item divided by it's total durability points. Any repair cost above that is the profits that the shop has set for repairs. They are a steady income for the shops that handle the most common items. It is a transaction that the customer finds more difficult to judge when trying to figure the shops costs and profit. Repairs are also a very inexpensive service to offer. As of this writing, even the lowest ranking vendors can make repairs on any of the item types they handle.

Strategies

The Bucket Metaphor:

One could picture a Shadowbane city economy, in rather simplistic terms, by imagining a bucket with a bunch of holes in the bottom. If wealth were seen as water, you could think of citizens as sponges that draw it from a local "well" in exchange for time (production/farming). They then begin squeezing portions of their draw into the bucket in exchange for some benefit, and keeping the rest in their reserve. In the bucket, wealth is transferring between citizens (net zero), or heading towards the holes. The level of the water collecting in the bucket represents the sum of all the transactions happening in a city. Imagine it churning and rising as it is added to and exchanged around (economic flow). Wealth in a city economy is ultimately spent on things that cause it to vanish. These are the holes at the bottom of the bucket (value sinks) that can potentially lower the water level by draining the gold away into oblivion. A healthy economy is maintaining a good water level, with a productive amount of churning despite the holes that are constantly sucking the value away.

It is the game designers job to set the standard they think a typical city must meet in order to keep the water at the proper level in the bucket . They must first decide on the minimum amount of "value production labor" they think a basic Tree of Life colony should need. They then set the gold and equipment drops at one end and the value sinks on the other and the players are expected to sort it all out in the middle. The sorting out process is very important because THIS is what ultimately determines how much production labor (read: farming treadmill) will be required of each citizen in a city, especially when you consider things like future sieging and defending.

Building a city in Shadowbane is very much like starting a small business in some ways. To walk into it without researching your "market", planning your team, or assessing your assets and liabilities is to risk many costly mistakes and, at worst, failure of the city at the economic level which is the writing on the wall when it comes to survival at all. When an economy is not working properly the citizens are likely to be having less fun. Citizens without the most staunch loyalties may start looking for better opportunities elsewhere, which can lead to their labors benefiting some other city, either partially or entirely.

Therefore, the first thing an entrepreneurial guild must decide when considering a city is the kind of bucket they are going to design. The size of this bucket essentially represents the game designers economic model so this remains constant. The things that city designers DO have to consider are: The types of "wells" that are available at the city location, the number, size and quality of the citizen "sponges" that will be moving the water, the plan for circulation of water within the bucket before it drains away and the size and number of holes in the bottom.

The Well:

Wealth, or value, is created in the Shadowbane economy when players invest their time into generating it. This value is created in one place and one place only, monster hunting grounds. Here players spend their time killing things which then reward them for their time with experience, gold and/or items. A city wants as many different levels of characters as possible to find productive uses for their time. The more productive characters are, the more they benefit the city. This means that the better the variety of hunting grounds, the broader the spectrum of characters will be accommodated. It is very important, however, to look at the long term needs of the city first. This means finding a spot that is close to a high level hunting area, and then trying to make sure that lower areas are available too. High level hunting means high level characters and high levels of wealth to be gathered. This is a must for any city's survival. The closer each hunting area is to the city, the more convenient it will be for the citizens and the faster wealth will find it's way to the city's gates.

Something else to consider about the well, or wells, a city plans to draw from is the kind of items that are regularly dropped there. Familiarity with the common types of items found at the various available spawns will help a city to determine both the kinds of shops that they will need most, in order to encourage pawning, and the kinds of exchange rates (purchase offers) that must be set. Items that are heavier will not be as attractive to carry back, even if they have significant value. The exchange rates for such items may need to be raised in order to encourage collection and pawning rather than leaving them to vanish in the fields. Other common items may be very light and, therefore, more popular because loads of them can be carried at once. The exchange rates for these may be a little lower to take advantage of this popularity and balance them against the heavier items. The more the shops purchase percentages can be tailored to the strengths and weaknesses of their "well", the more efficiently items will actually turn up to become value in the economy.

The Sponges:

Each citizen in the bucket metaphor is a sponge that absorbs water or "value" from a "well" and takes it into their possession. They may also take water that is already in the bucket into their possession through exchanges with other citizens. Through self interest, and loyalty they are continuously drawing and releasing some quantity of this water either from the well as new wealth or from the bucket as traded wealth. The more time each citizen has to draw and exchange, and the better a sponge they are able to become, the more they can potentially benefit the economy. While the raw income and trade that citizens represent is attractive, the classes that citizens choose to play also represent value sinks that the city must account for in their management. The more different kinds of classes a city chooses to serve, the bigger the economic strain will be, and the more is ultimately demanded of the population in order to support the city.

The serious study of the potential population is a very importaint stage in a city's design. Everything else about the city economy should be based on conclusions made at this very first stage. This means that planners really need to sit down and start crunching numbers based on various questions about their population. The game designers will have already determined a target population size that a minimal city must have for everyone to live a comfortable existence. They may have even come up with a few different target populations depending on the diversity of trainers a city plans to offer. The guild leaders who are planning a city must do their best to determine what these target population sizes are, and then ask additional questions about their populations:

1. Will this be a closed, exclusive, community or will citizens be encouraged to join and/or visit to participate.

2. How many citizens on the roster will actually be available enough to fund this city?

3. How much time on average per week will each member of the city be willing and able to devote to farming gold?

4. How much gold can be generated in this amount of time at the planned city location?

5. How much of that gold will need to go to back to characters for training so that they can continue to improve their gold generating skills?

6. How much willing participation in the local economy can be expected from each member?

7. If sub-guilds are involved, how interested are they in starting their own city eventually?

8. What kinds of classes are the population planning to play?

9. Will the individual classes be able to adequately fund the infrastructure necessary to support them or is class restriction required?

10. Will the classes divide up into fairly even groups or will there be some minority classes that will need special consideration?

The Economic Flow

A city economy does not flow at maximum efficiency all by itself. Citizens are sponges. They absorb wealth from the well but they need proper convincing if a city wants them to squeeze that wealth into it's economy. Once that wealth is in the bucket, they also need motivation to keep that "water" moving around. The more the water is moving, the better it is for the economy because more citizens are benefiting from that value as it moves through them on the way to the value sink. A well developed city economy encourages as much economic flow as possible by making it worth a citizens while to devote most of what they absorb back into the local environment which is, in turn, set up to send the wealth through as many different people as possible.

There are different management approaches a city can take to maximize value circulation depending on their resources, and approach:

1. For one large community willing to cooperate for the collective good, small groups of members could be assigned responsibility for building, upgrading, and managing assets that they DO NOT have a personal interest in. Their personal goals are, instead, attained through wise service to someone else's interests, which gains them profit, which they then use to improve themselves through OTHER citizens who maintain THEIR needs. These other citizens improve themselves, in turn, through yet others who are serving THEM wisely in order to attain THEIR own goals through yet someone else. The value brought into the city from the hunting grounds is, thus, sent right on down the line in many directions, benefiting many people on it's way toward the value drains. The revenue to the city itself is generated through the taxation of each of these transactions which sends a percentage of the profit straight to the ToL strongbox.

2. As nice as the above system may be when everyone is offering loyalty to one overall banner, it is more difficult to establish this kind of structure if you have multiple independent guilds, each with their own self interests, sharing the burdens and benefits of a city. In this sort of a situation the flow may be better established WITHIN each guild first, by letting them support trainers and equipment closest to their interests. City wide flow and trade is then established through alternate characters which become dependent on the trainers and shops sponsored by the primary guilds. This sort of approach offers more stability because each independent guild has a vested self interest in their part of the city. It is much more difficult, and less desirable, for them to break away from the central city and start a tree of their own with essentially the same assets they currently have control of. The city, meanwhile, is still able to generate revenue from the taxes on the profits of each transaction that each group makes.

A large consideration when it comes to economic flow is to realize that some actions can look weaker on the surface, but have secondary benefits. Others actions can look better at face value, yet create secondary problems. It is sometimes necessary to look beyond a single transaction to see important effects.

Here are some examples:

Setting vendors to give away more money for pawned items does not look like as good a plan when it comes to the vendors recycling profits. The citizens, however, will have more money in their pockets at the end of their pawning and they will use this to train, repair, and purchase crafted equipment at a variety of other shops. This means many of the shops will be collecting that additional money given out anyway, which is good for economic flow, and characters will be improving themselves more quickly.

If a city's shops set the various profits high, it looks like a promising way to generate cash quickly and efficiently. The citizens, however, may face expenses that never allow them to earn enough to adequately improve themselves. Unused training points are, essentially, untapped economic potential and weaker citizens. A more disturbing possibility is they may actually pretend to go along with it all, yet still withhold their wealth from the shops in a silent protest, or release it into some other city's bucket, fueling it's economy instead. Think of this as "chasing wealth right out of the local economy".

If a city's leaders decide to micromanage all the shops themselves, they will certainly avoid some of the problems associated with counting on other people. The problem is that, by removing a valuable layer of trade, they create a nearly direct path of gold from the wells to the buckets drainage holes. This deprives their citizens of the necessary "leavening effect" that value circulation among themselves can provide. It also makes for a much more spread out management situation. Managers will not be able to focus in on each asset's specific needs so not all of them will be operated at adequate efficiency.

If the shop or trainers are too generous and they set the profit margins too low, the citizens will rejoice but the assets will not be able to generate an adequate profit from the business they do. This means less tax and maintenance money and more financial burden for the property owners. Average citizens may be more flush, but the extra money is just sitting idly in bank accounts instead of working for the benefit of everyone. Growth begins to slow, and citizens may even start feeling wealthy enough to set out on their own, taking their value stash and their economic potential out of the economy altogether.

After the initial push to get a city off the ground, the goal should be reach a careful balance between supply and demand for EVERY asset. It should allow average citizens to generate enough cash to keep up with their training and properly equip without straining themselves, yet not have too much left over after average amounts of effort. Those who wish to save gold for future goals should need to work a little harder than average to gain extra wealth. Those who do not have huge amounts of time should feel a little broke, but not really lacking in the things that make their characters fun to play. The right balance will ultimately generate more revenue for a city than leaning one way or another because more citizens will stick around, and more money is willingly offered into the mix to the benefit of all.

The Drainage Holes:

Beginning with tree of life maintenance, every city's economic "bucket" has holes where the wealth generated by the citizens drains out of the economy and disappears into the void. The most obvious of these "value sinks" to city managers are the maintenance and salaries required by buildings and tradesmen. These can make or break a city economy for the players. A consistent level of "water" is required in a city's bucket because otherwise, if the buildings and trainers appetites are not fed, everything starts to degrade. City designers must plan very carefully to balance their population against their expenses or they risk creating a farming grind that will make game play much less fulfilling to the citizens.

Essentially, every building and tradesman represents a hole in the economic bucket, and the higher the ranks, the larger the holes. Some important questions to ask when considering the purchase of assets and tradesmen:

1. Is this really necessary or can similar services be found and negotiated in a nearby city?

2. Is this something different than the nearby cities offer and can services be traded with them?

3. Should this be managed and maintained by the city or should the burden be delegated to someone else in exchange for tax revenue?

4. Should lots of tradesmen be built in one city, or can a plan be developed to branch into specialized hamlets over time?

5. How high will a particular tradesman need to be ranked before he is worthwhile?

6. Is there a minimum rank that a tradesman can get away with to keep costs down?

7. How much gold will the asset/tradesman require weekly at the target ranks?

8. How many characters that use this asset are required to keep it from becoming more of a liability than a benefit to the city?

9. How many characters that need this will offer a good amount of playing time to help support it?

10. How will this asset/tradesman be supported when the people currently dependent on it no longer need it as regularly?

11. What kind of profit margin must be set for this asset to support itself when considering the number of people who will use it?

12. Should the building be upgraded to R7 so that three tradesmen can be placed inside or should there be low ranked buildings with two each?

The most promising and forgiving approach that the game seems to offer, from a value sink standpoint, is for a guild to carefully focus themselves into a small number of classes, at least in the beginning. Building an independent city around one or two guild halls is MUCH easier to manage because the "bucket" has fewer holes yet the same amount of citizens squeezing wealth into it. The water level is easier to maintain, because many more citizens are visiting the same shops and trainers, making them more profitable. Prices do not need to be as high, citizens have more money to upgrade themselves with for less farming, and their is much more cash available to fund defenses and support for sieges. This does not answer the question of military diversity, however, and THAT end of things must be worked out in various ways like unfolding a nation in stages or various political arrangements including trade of services between independent cities, independent guilds cooperating under one tree or the hiring of mercenaries to fill in the gaps in time of war and defense. The key to pulling off this type of approach rests entirely on the level of cooperation and or discipline that the population is capable of offering the city.

It is always necessary to watch out for assets that would require more than they generate just to stay standing. Those kinds of assets under poor leadership can have citizens straining to support things that they have no real interest in. Taxation Tax is a very handy way for a city to generate revenue for itself without needing to micromanage every shop and trainer. The city can set the ToL to tax against each sale in the building in question or it can charge a lump sum that becomes due at the same time as the maintenance. The only problem with taxation is that, as of this writing, it can only be placed on buildings that are under the Tree of Life's "protection". This makes it harder on cities that have too many buildings. Even a fully ranked tree of life can currently only protect/tax 10 structures. This mean that it may be wise to plan on ranking the revenue based structures all the way to rank 7, especially if the plan calls for protecting non revenue structures like barracks or bulwarks. 2 rank 7 buildings can hold as many trainers or crafters as 3 buildings that are below 7. This begins to add up with multiple buildings. A total of 30 vendors can be taxed if they are all in R7 buildings under an R7 tree. This does not account for things like city defenses but it does serve to illustrate the importance of planning for taxation when considering a city's assets.

Inter-City Trade

Trade between cooperating cities and / or competition between cities has not been a widely seen phenomenon for a variety of reasons. Security concerns are one of the biggest reasons, but the lack of "persistance" in the beta world has also made it difficult for trade agreements to truly bloom. If these issues can be properly addressed, however, there is a lot of room for exploration. While the state of the game at the time of this writing makes it difficult to know the true potential of inter city trade and dependence, there are certainly some things to consider.

1. Each vendor in a city has 3 different profit margin settings: one for guild members, one for nation members, and one for everyone else. The fact that it is possible to create different prices for different characters, however, does not mean that it is always in the best interests of a vendor, or a city, to do so. As explained above, any individual standing in a city is a "sponge" that is holding wealth that they have drawn from a well somewhere. The can squeeze this wealth out of themselves just about anywhere they feel the desire to. If it is worth their while to squeeze some of their wealth into a strange city's "bucket" then it is entirely possible that they will. If, on the other had, the prices are ridiculously high for them, then they will probably save their wealth until they get home. Impulse spending by outsiders can be a city's best friend, if politics are arranged properly, and there is no logical reason why it should not be encouraged. If anything, the visitor from another city has MORE economic clout than the citizens of the city he's standing in. The locals are mostly dependent on a city because of its convenience, visitors have their own city to fall back on so they need a much more compelling reason to spend while out visiting.

2. When multiple guilds are part of a city, or multiple cities are part of a nation, it is important to set the "normal" profit margin for vendors at the nation level rather than at the guild level. This sets the bar for profit based on transactions between sub-guilds and sworn cities, as it should be. How the rates end up above or below that will depend on a variety of circumstances. When a nation treats all of it's citizens equally in the economy, it lays the groundwork to promote lots of interdependence between multiple cities with less chance of unwanted competition.

3. One way to encourage inter city trade is to make sure that your shops are crafting high quality items. Many times shops can become glorified recycling plants that aren't maintained well enough to keep a quality inventory. A city that would like to encourage trade with outsiders will need to focus very carefully on upgrading and maintaining Equipment vendors to the highest ranks and making them worth the investment to do so. Crafting and re-crafting are the key to inter city item trade and it takes disciplined management to really excel. If word starts to get around that a particular city has very well stocked shops, people may actually come knocking on the gates asking to window shop. If they happen to also notice that the shop PURCHASES items from outsiders for a better rate than their own city at the same time. . well then. . that's not something that's necessarily bad . . How should a humble shop owner in a far off city know what the purchase rates are for some other city's citizens? What's that? You say that THIS particular item get's the LOWEST exchange rate in that city? What a coincidence...

4. Trainers can be a problem or a solution when it comes to inter city trade. Most cities will consider the trainers to be their bread and butter. When one city's trainers are competing with another city's, things start to get dicy. There is nothing stopping two cities from making very beneficial arrangements, however. If they each sponsor trainers that the other do not have, they can arrange to offer visitors the same rate as the guild or nation for those particular trainers. In the case of building nations, this becomes critical to establishing economic flow between cities. With a good deal of for thought, planning, and cooperation a perspective nation could develop a design plan that has it unfolding itself in stages. A master city focuses on a specific limited combination of classes. As it grows in power, it spins off specialist cities that each begin to sponsor assets that are needed for the next stage of characters. If it then starts to recruit to the new specialist cities as hamlets, or opens those hamlets up to free trade, the possibilities are as limitless as their management.

The dynamic world that Shadowbane offers creates a kind of economy that most games have not really offered. Each city is responsible for the planning and management of their own economies and this can swing both ways. It is up to the citizens of each city to decide for themselves if the place they live is making their game time worth the effort. It is up to the cities to create an environment that caters to the citizens self interest in order to keep them around, while also properly maintaining the assets that the city needs to survive. It can be a very careful and difficult balance to maintain and not everyone will be successful at it.

The complexity of this games economic setup is also such that it can play a large role in the strategic warfare that the game promises. Attacking a city can involve a great deal more than simply running forces up and whacking at the walls. It is up to each rival to seek out the economic weaknesses that may exist in the target cities and find ways to put pressure on them. While economic pressure alone may or may not be enough to bring victory, it can certainly be the straw that breaks the back of a powerful rival. The larger and more diverse a city is, the more vulnerable they may actually be economically.

Hopefully this guide has opened up new avenues of thinking for people who are participating in the game.