Character advancement is a very abstract concept in games like D&D 3.5/Pathfinder, as opposed to, say Call of Cthulhu and other Chaosium games which use the Basic Role-Playing (BRP) system. In the latter, if you use a skill successfully, you have a chance to improve it (although it is not automatic and becomes more difficult as you get more skilled). If you don't use a particular skill in an adventure, it cannot be improved. This feels more realistic. The "XPs and levels" approach of D&D could never be adapted to such a character advancement philosophy, but I think it could be done better. In older versions of D&D, you got XPs for treasure. It didn't matter how you got the treasure, be it from killing monsters, picking pockets or even taxing your serfs. Treasure was treasure and it was all worth XPs. Now, when you get right down to it, accumulated treasure is a purer measure of character success than monstrous bodycount. After all, it takes into account eveything your character does. If a bard spends the week entertaining at the local inn or if a wizard makes a few potions and trades them for some rare spell components, do these activities not warrant some experience? Such a system would also encourage players to take skills which might earn them some coin during the downtime between adventures. The gps earned might not entice them, but combined with XPs as well and suddenly taking a few ranks in Profession (woodcutter) looks a lot more interesting.
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