Basic Investing for HackMaster
There comes a point in many games when the characters simply have too much money. They may have purchased everything the GM will let them purchase, may be on the move and unwilling to buy real property (houses, bars and the inevitable stronghold), or may simply be wanting to make more money when they’re in that limbo between being having to scrape every last copper and being able to destabilize the local economy without half trying. Some mercantile-minded players may turn their minds towards investing some of their rewards in commercial ventures, hoping for a return in wealth and influence. Unless you truly wish to be playing HackTrade, however, most GMs will seek to abstract this process a little, letting the game flow without preventing the character from spending his wealth as he sees fit.
For the purposes of this article, Investments are of two different types: caravans and in-place businesses. Caravans are limited-duration ventures, and investment money usually goes to hire guards, drovers, and stock, moreso than the actual goods for sale. In-place ventures tend to be investments in existing businesses, either letting a business owner expand, hold a special event, or start up. Many of the same principles apply to each, but some modifiers will have different effects depending on whether or not the business venture travels.
Lastly, these rules are designed primarily for PC investment in NPC businesses, but it is possible to adapt them to PC (or detailed NPC)-run businesses; there are some notes at the end on using them as such.
The Core Crunch
Before I spend a long time discussing the options in dealing with investment, let’s look at the core mechanic of simple investing: 2d8*10%; under normal circumstances, this die roll may not be modified by Honor, and may never be modified by Luck Points. That’s the average return on investment for the gentleman adventurer. For those who don’t do the probabilities in your head, this means that, on average, an investor will see 90% of his money back; if he gave the merchant ten silver pieces, he gets back nine, for a net loss of one silver. This is intentionally not fair. A great many business ventures lose money, and if all the character has done is toss money at an investment, he will likely lose money. This number is simply return on an unresearched investment, and represents such vagaries as bandit attacks, market fluctuations and simple luck.
The average time for maturity on any investment is one month. This allows a trade caravan to make it to another city, sell its wares, buy more, and sell those upon return. For an in-place business, this covers a period of purchases and sales. Some investments may take longer to mature, or players may look to make quick money through short-term loans of a few days or weeks. All of these can be handled through similar mechanics, but shorter-term investments tend to carry a LOT more risks, while long-term ventures tend to be more stable. For short term investments, I suggest a return of (1d20p-1d4p)*10%; you’re far more likely to lose your shirt, but your returns may be much higher. For longer-term investments, I suggest (2d6+1d4)*10%; the floor is higher, the ceiling about the same, and they average about the same. Note that negative numbers on short-term investments are just that... not only did you lose your shirt, but the creditors want your pants as well.
What makes merchants (and adventuring venture capitalists) profitable is research, hard work, and a bit of luck.
Taxes, Fees, and Other Naughty Words
In my experience, a great number of GMs tend to ignore taxes in their games; while it’s included in game advice since near the beginning of the hobby, most simply do not bother to include taxes on adventurer loot. If there are taxes, they’re usually assumed to be part of the price of items, rather than something imposed upon characters directly and visibly. In some ways, this cheats players out of the joy of smuggling and such activities, though PCs are usually well-off enough that they can absorb a five silver piece surcharge on buying swords, or whatever the local equivalent is.
With investment income, consider how a government is making its money. Does it have a simple head tax, which only citizens need pay? An entry fee at the gates which buys you so many days in town? A property tax, based on number of windows or street frontage? Excise taxes, charging additional amounts for certain goods? Tariffs, wherein they charge for goods coming in from the outside? For player-investors, the most important of these will be tariffs and excise taxes.
Historically, most taxes have been tariffs and excise taxes; while income taxes are not new, they were not permanent parts of the tax structure, usually only being levied in times of war or similar crisis. Tariffs and excise taxes are much easier to administrate, since you only need to deal with a few members of the population (merchants), while the costs get passed on to everyone. Tariffs usually exist to increase the price of foreign goods and thus promote local industry. For example, if a city or nation has a young textile industry, they may impose a tariff on incoming textiles. This means more people will buy local textiles, giving that industry a local boost, helping to overcome some of their early costs. If you are investing in a trade caravan, knowledge of tariffs is crucial; any venture that includes fighting a tariff is going to have a much smaller profit margin. On the other hand, a tariff usually does not do a lot for a local business from an investors point of view; while it shores up investments, it does not add substantially to their profitability. A tariff subtracts 2d6p% from the profit of a caravan venture, but only adds 1d6% to the profit of an in-place venture. Depending on the investment, there may be no tariffs at all. Knowing about relevant tariffs is usually an Average Current Affairs skill check.
The simplest thing that can be done to mitigate tariffs is follow a trade route. If there’s a regular flow of goods between two points, costs tend to be lower, roads safer, and markets more assured. Following a given trade route increases profits by 2d4%, as markets are more assured to be available. Trade routes are set by the GM, but should take into account local character; you’ll seldom go broke exporting wine from Shyta na-Dobyo, but you won’t make much importing it in.
Excise taxes are on specific goods and services, either because the government wishes to discourage them or because they are viewed as being more costly in some way. A good example of a modern excise tax is that on tobacco in the United States; state and federal taxes serve not only as a discouragement to buying them, but also are supposed to offset health costs associated with tobacco use. Depending where you are on Tellene, these taxes might exist on certain foods, colors or types of clothing, or certain weapons or armor. Excise taxes generally do not add to the profitability or lack thereof in a venture; they become part of the cost of the item, and usually do not add to the costs of the merchant.
Where both types of taxes become vitally important to the value of an investment is illegal commerce... smuggling and tax evasion. A large tariff or excise tax creates a market for goods that avoid this tax. While there are some legal means of avoiding such taxes (dispensation from the local ruler; a forgery is usually at least an Average check), those are usually role-playing opportunities, rather than hard and fast numbers. Smuggling and tax evasion, however, are explicitly illegal ways to get around paying the taxes. Prices are usually a bit higher than the base because of the risks the smugglers run, but lower than the taxed price. Smuggling is also used for goods that are strictly illegal in a given location. That may include exotics like poisons, slaves, or dangerous narcotics, or more common-but-restricted items, like goods from an embargoed country or icons of a outlawed faith.
Smuggling can be incredibly lucrative, but also carries a lot of danger, even for investors. A venture that involves itself in smuggling or selling stolen goods adds 3d100% to the profit, and ignores modifications for tariffs. However, there is a base 5% chance that any investment in a smuggling operation is completely lost, and a 20% chance that a completely lost investment will result in the investors being questioned by authorities; how they’re questioned and what the results are will depend on the nature of the authorities and the politics involved. Lawful characters will likely avoid smuggling ventures, at least from a money-making perspective. These same numbers can be used for in-place ventures that deal in stolen goods.
The Secrets of My Success
Many of the situations described above are beyond the control of the player; if they’re setting the tax rates or import laws of a city, chances are they’re less concerned with a few hundred silver in investment income. For the investing PC, however, there are several things that can be done to increase profits, and pitfalls that can be avoided with a bit of work.
The most obvious is to seek the blessing of a priest of the Profitmaker. Profiteers sell this blessing, of course, usually for a cost of 10sp per level of the priest, but this piety does attract the attention of the Profitmaker, adding one-half the level of the priest to the profitability of the venture. Some merchants swear by giving a few coins to “Old Lucky”, but that is frequently gambling with one’s fate; a votive worth at least 10sp results in 1d6p minus 1d6p% being added to the profit of the venture, or 1d6p minus 1d6% if the venture is especially risky (such as smuggling, taking a road known to be infested by bandits, or trying to trade with humanoids); Draper’s blessings can be a curse, especially on those who aren’t willing to take a risk. It is never advised to ask for both, due to the enmity between the two churches; if the Profiteer learns of the first blessing, he may well lay a curse, instead; that causes the Profiteer’s level to be subtracted from the profitability of the venture. Risk’s priests tend to not act, admiring the risk taken; this does not automatically cause the venture to be risky, however (so you can’t kill a bad penetration roll by asking the Profitmaker for a curse).
PCs will frequently accompany caravans, hoping to protect them from bandits personally. Likewise, many will choose to hang around local investments, hoping to use their own fame to improve business. This can be quite effective, but means a lot more risk for the PCs, both in personally and in their Honor. If the PCs spend the entire time with the venture (no side adventuring, no chasing down fleeing bandits, the whole month), they may apply their honor benefits to the base investment roll (2d8*10%) including, if they wish, the opportunity to burn honor to improve it; this is, in fact, part of why honest merchants are frequently successful and why many merchants tend to be viewed as sleazy. It should be noted, however, that if anyone burns honor to improve the roll or reroll, everyone takes an honor hit (though only half as much as the person who burned honor).
PCs may also engage in research, seeking to find the best investment. A difficult Glean Information check adds 1d4% to the profitability of a venture made during that week. Up to eight hours worth of checks made be made each day for each researcher, and the results of Glean Information checks are cumulative for that week, but the costs of those checks are not counted as part of the investment; if have 100 silver and spend 30 of it on bribes and drinks, you only wind up investing 70 silver. Checks that would exceed eight hours are wasted, as are failed checks.
The PCs may also want to negotiate a better return on their investment; this is resolved with an opposed Salesmanship test, with the players adding a penalty of three times their profit increase to their roll; if they want 5% more, they must take a 15% penalty to their opposed Salesmanship test.
How to Succeed In Business (Without Really Trying)
So, the players wish to start their own business. Perhaps they have an excess of downtime, or they wish to know how well their character will do now that he’s retired to his goat farm in Ukiah. To do this is relatively simple; replace the base 2d8*10 roll for a one-month investment with a d100+skill roll for the relevant skill; this represents the base percentage of their investment that they make each month. The GM should determine initial start-up costs (buying or renting space, the costs of necessary tools, etc.), and PCs may invest what remains of their nest egg as they see fit. Any money invested is at risk, however, so players may choose to invest less than all of their remaining funds, keeping some aside “for a rainy day”; their monthly income is based on how much they invest, however.
Obviously, this calculation means that without a least a 50% skill mastery, one is likely to lose money on an investment. Most of the other modifiers still apply, however; research via Glean Information checks represents researching additional customers, and applies to the entire month in such a venture. Additional help (such as apprentices and journeymen) add 1/10th their mastery to the roll (twice that if they have the General Labor proficiency), but their wages represent the absolute minimum that can be invested in a given month. Helpers with only the General Labor proficiency add only 1/10th their relevant attribute, but there must be someone with the appropriate level of mastery in the Administration skill. Note that coin values are used as an abstraction of value; the smith himself may be paid in chickens and charcoal, and pay his helpers in bread and beer; coin values simplify the calculation from “30 loaves of bread and 60 pints of beer” to “about 15 silver”.
For example, Avanian the Smith has a mastery of 60% in smithing. He has two apprentices, each with 25% and wages of 15sp per month, and two journeymen, each with 40% and wages of 25sp per month. He also has a sales halfling, who has a Salesmanship mastery of 50% and wages of 20sp per month. All of his employees have the General Labor proficiency, meaning they coordinate well. Avanian’s base is d100+60%, and he adds 10% for his two apprentices (5% each), 16% for his two journeymen, and 10% for his sales halfling, for a total of d100+86%. If he invests 100sp per month in his business (his minimum, given the wages of his employees), his average return will be 136%, or 136sp. This leaves him with a tidy profit, or at least enough money to feed himself on.
Cheat Sheet: The Numbers
d100+Relevant Skill Mastery
Tariff, trade caravan:
-2d6p%; only -2d6% if a Difficult Administration check is made.
Tariff, in-place venture:
Smuggling or Illegal Trade
+3d100%, but 5% chance to lose everything, and 20% of being questioned by authorities.
Blessing of the Profitmaker
+1/2 the priest’s level%
Blessing of Risk, tame venture
Blessing of Risk, risky venture
Curse of the Profitmaker
-the priest’s level%
Research, per Glean Information Check
Opposed Salesmanship Test
one-third the penalty accepted on the opposed Salesmanship test
Additional help, in place venture:
+1/10th skill mastery, but require wages as part of minimum investment
Additional help with General Laborer proficiency, in place venture
+1/5th skill mastery, but require wages as part of minimum investment