That starts with talking about what the purpose of a crafting and economic system is. Curiously it appears as if that discussion doesn't always take place during the design phase of an MMO, developers sometimes seem to just add a crafting system to check another box on the list of features every MMO has. But generally speaking, the objective of a crafting system and economy is twofold:
- Enable a form of indirect social interaction between players, thus making your virtual world feel more alive.
- Provide an alternative activity of gameplay to complement adventuring / combat.
The objective of enabling indirect social interaction necessitates that the crafting system results in players buying from and selling to each other. That means that at least a part of the raw materials for crafting has to be gathered by players and be bought and sold on whatever auction house or market system you have. It also means that the resulting crafted goods need to be attractive enough to be sold to other players. The latter isn't easy, because it puts crafted goods in competition with items acquired by questing or looting. Players tend to take the way of least resistance to any goal, so if crafting a sword is much easier, or buying a crafted sword much cheaper, than getting the same quality of sword by adventuring, you end up hurting the adventuring part of the game. Nobody wants that, not even the crafters.
Fortunately the solution to the problem lies in the second objective, providing an alternative mode of gameplay, a different activity than combat. If the act of crafting is non-trivial, and requires both time and skill, it both provides this alternative activity, and prevents crafting goods from becoming too cheap and common. The worst possible design is unfortunately the most common in existing games, where crafting is rather trivial, with either no gameplay at all, or an uninteresting, not challenging gameplay requiring no skill or thinking at all, but then requires players to craft hundreds of items to advance their skill. You end up with players buying tons of materials, auto-crafting lots of worthless junk, and then just selling it at a loss, flooding the economy. It is better to have a system where skilling up is done with cheaper "practice" crafting, which doesn't actually produce any goods.
Some smaller, niche games have much better crafting systems, a prime example being A Tale in the Desert, where for example forging a blade is a highly interesting game of its own, requiring both time and skill, with the result being directly proportional to the amount of time and skill invested. If that is too hardcore for some, a more mass market viable approach is the one of Puzzle Pirates, where every craft is a different puzzle mini-game. Just don't use the same cheap Bejeweled clone for every single craft, to be really successful a crafting system needs to offer some variety. I think sometimes developers of big triple-A MMORPGs look down on the developers of casual puzzle games, and end up underestimating the difficulty of designing a good puzzle game with endless replayability, and the correct mix of chance and skill elements. Meanwhile the devs of casual puzzle games are laughing all the way to the bank, because with good game design and a small budget they end up being more profitable than many a MMORPG.
Once we have a crafting system which requires some effort, time and skill-wise, we need an economic system to trade the raw materials and crafted goods. At least for a US/Euro market, a system with a public auction house or similar market is preferable, where players can post their goods and be offline while they are sold. Adding bells and whistles to that system is much appreciated by players. An auction house should not only enable you to find the goods you are looking for, but also provide you with some price history of past sales, so players don't need to use addons for that purpose. Having the option of buy orders, and not just sell orders, is a big bonus for crafters.
But probably the biggest design question on creating an economy is whether you want a localized economy, or one that is uniform throughout the virtual world. The uniform system, where players can put an item on the auction house in one city, and other players can buy that item in another city, is obviously easier. It fits well with virtual worlds in which traveling by teleport is common. If however you have a world in which traveling is an important part of gameplay, and teleporting isn't possible, then localized economies can be used to enhance that. For example a typical crafted good could need two resources, A and B. In one part of the world A is common, and B is rare, while in another part of the world A is rare and B is common. Thus buying common raw materials in one location and transporting them to where they are rare and thus more expensive becomes an important part of economic gameplay. The catch of that is that you then need to make traveling interesting, and there appears to be a lack of ideas in that field, beyond having traders robbed by other players in PvP while traveling.
So there you have it, some design principles on how to make a good crafting and economic system for a MMORPG, based on two simple objectives. As this post will undoubtedly evoke lots of responses in the form of "my favorite game X already does all this", let me already assure you that I did play game X, and it fell far short from ideal, for any given value of X. Of course nothing I discussed here is completely revolutionary, but any existing game I've seen lacks parts of it, and has flaws like uninspired crafting mini-games, a badly designed auction house, boring traveling, or some crafting grind where you need to produce hundreds of items.
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