It's actually pretty close to how it works in this city. All of the smith's in the city are licensed by the merchants guild and will either accept commissions for custom armor or sell their work to the armor and weapons vendors around the city. Their work is graded my the merchants guild and an official price is determined by the guild. So that way the city can control the level of inflation and avoid price gouging. There a deep market economy in this world but mainly I just wanted a city that my players could visit that had a wide variety of goods and services at varying price. It gives them a sense of accomplishment when they could barely afford an inn in district 4 (working class district) . Yet now they are 15 sessions in and can afford to shop for custom armor in district 1 (noble district). It wasn't really intended to be very realistic as this city is built around adventuring. And real medieval city's weren't at war with orc's and dragons, trolls and undead lol.