The gears have stat caps. Are you wearing AF gear? Google Final Fantasy Gear Calculator, and mess around with the options. Click Deciple of the Hand, Click on the gear your using, and then click on the materia slots and a window will pop up allowing you to set the gear in different slots.

Different servers have different prices for Materia, usually, Tier 3 is cheaper than tier two and so you should use tier 3 instead.

The error it's giving you, indicates that you aren't using the Militia gear. Once you reach 50 the first step is to get all of the best in slot gear. Then work on materia melding it.