Part of creating an entire fictional world often comes across the question of economics. At its core, economics is the way in which resources and goods are affected by value. There’s a lot to unpack in economics, so it may help to start with your currency and their units.
Start by figuring out what your lowest value unit is. The common, day-to-day grocery shopper may not have a lot of power as an individual, but your lowest unit determines the lowest possible cost a merchant can charge. From there you can scale it up into the higher currencies. This is usually where math starts getting involved.
It might help to think of currency as a sort of rarity mark. You have extremely common, common, uncommon, rare and extremely rare. Each level of your currency has more purchasing power than the previous unit, building off each level below it.
For example, we’ll use the American quarter. It’s worth twenty-five cents. Four quarters (extremely common) to make one dollar (common). That means to get to a five dollar bill, you need twenty quarters. To get to a ten-dollar bill, you need ten ones, or forty quarters. To get up into the rarer fifty-dollar bill, you need two hundred quarters, fifty ones or five tens. Building up to that fifty would take a little saving.
Once you’ve determined the units and the scaling of your currency, it’s time to start assigning value to things. You don’t need to get super specific here. Instead you can use the rarity level of that particular resource or good to help you figure out how much it might be worth.
Common, everyday items such as food probably won’t be worth very much unless there’s a scarcity of it. Items that require either specialized skill or equipment become harder to produce and as a result become rarer. This is where the innerworkings of the economy begin to branch out and get messier.
For example, your common citizen. They can likely buy their common items such as food quite easily. This is something they need to either buy or produce themselves every single day. A new winter coat however, is something they’ll only need for part of the year. A fancy coat with lots of decoration and add-ons requires more skill to produce, which drives the price higher. This means the cost of that fancy coat could jeopardize your citizen’s ability to purchase the common resource they absolutely have to have. Ergo, they buy a simple coat, and the rich merchant buys the fancy coat because it won’t impact his ability to buy food.
This presents another consideration for your economy: wage and wealth. Wealth is how much access a person has to any given resource. Currency is largely a form of wealth granting access to any purchasable resource. Often, we gain wealth as a wage, either by performing a task for someone else or selling something we’ve produced.
For the most part, this holds true across your common population. Either they’re performing a task in exchange for a wage, or they’re producing something to sell. In essence, they’re exchanging their time and labor for currency. This is the basic idea of a wage: the value of a person’s time and/or labor.
The more valuable a person’s labor or time is, the likelier they’ll earn more. There’s a number of factors in this including skill, experience and job hazards. A highly skilled craftsman can produce four items in an hour. His apprentice can only produce one. That means when the crafts go to sale, the skilled craftsman earns more than his apprentice. Over time, the apprentice can catch up and begin selling as many wares as his mentor, but to start he’s going to make less.
In theory, a hazardous job should also earn more. Though this often applies when dealing with adventurers going off to slay monsters and the like, depending on the rest of your worldbuilding and other outside factors, this might not be the case. Mining is a stressful and dangerous job. With modern technology and safety advancements, thousands of miners still lose their lives every year. In the 1900’s, a day’s wage for a miner was often only six or seven dollars—often for ten and fourteen hour days.
Another place where your wealth and wage might get a little funky is in restricted resources such as land.
If you own land, you can sell it, but it becomes a one-time sale for that particular piece of land. Alternately, you might be able to rent it out in some cases, such as allowing a farmer to work the land in exchange for a small amount each month. This applies to buildings as well: you can sell them, or you can charge rent for someone to live or conduct their business inside. Although making money that way would take a little knowledge and thought, the effort is relatively low—yet because access to land ownership is often barred, it’s possible for landlords to make a tidy sum.
Although this is only scratching the surface of economics, these are two of the basic questions to ask when working with your fictional economy: how much do things cost and how do people earn enough to purchase those things?