How do you create a functional system of magic item creation?
There are many different ways; The real question, is do you want to?
A discussion on the state of item creation throughout the iterations of Dungeons and Dragons:
The section asks you to convert each item power into an equivalent spell level, and multiply that by 1000 gold. You then add 10% of that cost per charge, or 10% of that cost * 50 for permanent magical items. The length of time is 1 week + 1 day per 1000 gp in price (or dc as the money is called)
Other then this being a /very/ expensive method in gold and time of shopping, there is this phrase in the beginning,
"A magic-user must be 9th level to even hope to make a magical item. As with spells he must go on some adventure to find one basic spell component for each effect of the magical item he wishes to produce."
So in true, classic style, it was basically left up to the DM & Player to work out.
1st Edition: In 1st edition Gygax clearly lays out his thoughts on magic item creation, which basically amount to - they exist, so someone must have made them. He suggests giving the party no information on the process, and requires a high level for item, scroll and potion creation.
There are a number of hidden guidelines in the rules, A lab is required, and the time varies based on the item, ep/100 for potions, or 1 full day for each level of the scroll.
He then gives examples for basic items, such as a 'scroll of protection from petrification' and what is required. A selected quote showing the process for creating ink for this specific scroll.:
Harvest the pumpkin in the dark of the moon and dry the seeds over a slow fire of sandalwood and horse dung. Select three perfect ones and grind them into a coarse meal, husks and all. Boil the basilisk eye and cockatrice feathers for exactly 5 minutes in a saline solution, drain, and place in a jar. Add the medusa’s snake venom and gem powders. Allow to stand for 24 hours, stirring occasionally. Pour off liquid into bottle, add sepia and holy ,water, mixing contents with a silver rod, stirring widdershins. Makes ink sufficient for one scroll.After this, of course, there is only a base 20% chance of failure. The bulk of the rules regarding item creation, come in the spells 'enchant an item' and 'permanency'. It basically breaks down into taking 2 + 1-8 days, requires rare components, the best materials, and a saving throw versus spells to be made for success. Permanency carries the cost of lowering the spell casters constitution by 1.
It asks you to create a 'difficulty factor' for the item, in a loosely interpretive way. There are guidelines, but they require judgement on the part of the DM. There is nothing wrong with this - in any edition, it is a crucial step in the design, function, and creation of magic items.
There are similar guidelines hidden in these rules - such as a +5 bonus to success checks for specialist wizards for magic items within their school, in addition to a required laboratory.
The difficulty factor affects several things - including the number of 'special materials' the player must collect - 1 for every 5 points of difficulty. It suggests asking for items that are expensive (100-1000x the difficulty), based off the laws of contagion and similarity.
It also suggests that items be perishable, so that the magic user can't prepare ahead of time, and selecting the items towards creating an adventure for the player. As a final piece of advice, he suggests creating impossible or non-existent requirements such as "A gem hatched from a poisonous snakes egg".
Then, you must roll to succeed. Protection scrolls take 6 days, and spell scrolls take 1 day per spell level, they start off with a base chance of 80% success before modifiers. Potions take 1 day per 100 gp of cost, rather than experience, and an additional 1d3+1 weeks to research the original formula. They have a base 70% success chance after modifiers. (Remember that these success chances are for level 9 characters - level 11 in the case of actual magic items, and not potions and scrolls.) Items work as in 1st edition, Permanency is needed, as well as at least 1 casting of enchant an item, along with whatever items and spells the DM requires. The time on item creation is a number of weeks equal to it's difficulty rating (usually 15-20) plus another 2d6 months! The base chance of success is 60% before modifiers are applied.
The general gist of the Crafting item creation system is, each normal item has a DC and a cost. You convert the cost to silver pieces (x10) and roll the d20, multiplying that number by the DC to determine the number of silver pieces you complete of the item each week. You also pay 1/3 the cost in gold to create the item. There are some modifiers like being able to increase the DC to shorten the time. Unlike in the other systems above, failure of a roll is not total, it just indicates no progress, unless you fail by more than five, in which case you ruin half your materials.
The Magic Item Creation system is the first real change we've had in the item creation paradigm - it sole purpose allows you to exchange resources.
If you give up personal power (in the form of a feat) and you can acquire magic items for half price with the expenditure of 1 (8 hour) day per 1000 gold pieces of the items cost. So taking the feet allows you to accomplish the creation of magic items in a reasonable time frame (up to a month for the most powerful items).
The main issue with third edition is that each player character is expected to have a certain wealth by level - ergo, if they don't have the magic items for their level, then they become underpowered. This creates the assumption of magic stores and magic conversion shops where the players visit, allowing them to purchase the items they need to maintain their power curve.
Tomorrow: Problems with item creation.