What is an item worth?

[Conradus]

With the proliferation of posts on these threads complaining about undercutters I started thinking about what exactly the items that we have in the game are worth.

Without an established "worth" it is almost impossible to judge a fair price - so I set about thinking about how to determine this. I came up with three basic criteria that should determine a floor on the price of a commodity. Given that once a player has competition and every good that they make will be the same as any other player's good, the need to treat goods as commodities becomes integral to this idea. A second given is that supply will outstrip demand. Since there is no absolute limit on most materials in the game as more people loot more things, craft more things, and try to sell more things they will eventually outstrip demand.

"Fair price" is a meaningless term, mostly used by people angry that others are refusing to pay them what they feel they are entitled to. An item is worth what somebody is willing to pay for it. No more, no less.