Stronghold Definitive Edition: Economy Guide

Stronghold Definitive Edition gameplay relays on two primary concepts: Economy and Combat. To view a combat guide, visit Stronghold Definitive Edition: Combat Guide.
An effective economy will maintain a constant growth rate, while optimizing building placement and generating gold revenue through taxes and selling excess resources. The most effective economy will also utilize Ale Coverage and Fear Factor. All of these concepts are covered in this guide below.
=== Economy Essentials ===
==== Population Growth ====
The more population you have, the more gold you can generate from taxes and selling excess resources.
The green circle around the keep's fire place displays population growth. Every time it fills up, a new peasant comes to the castle. If it remains solid green, peasants have stopped coming either because there is not enough living space or not enough jobs.
To create constant population growth, you need to create hovels and jobs. Each hovel allows for an additional 8 peasants and the total occupancy available is displayed in the bottom right of the screen on the scribes notebook. 
A castle can have a maximum of 24 idle peasants (unless you destroy manned buildings, a useful trick taught in the combat guide). Idle peasants are available to train in a barracks or other military building. Idle peasants stay at the campfire and can be viewed by clicking on any military building. If there are 24 peasants available, the castle's population will not grow until you construct more work buildings. The cheapest work building is the Woodcutter Hut, costing 3 wood and growing your population by 1. The most space efficient work building is the Mill, costing 20 wood and growing your population by 3, while only filling a 2x2 space.
As you grow population, you will need to increase food production. Each peasant on normal rations eats 0.2 units of food per month. Military units do not consume food.
==== Popularity ====
Popularity ranges from 0-100. If your popularity is 50 or above, peasants come to the castle at a constant rate, regardless of popularity. If popularity falls below 50, peasants leave at a constant rate. 
Popularity rises with net positive happiness, and falls with net negative happiness. It rises and falls proportional to the amount of happiness, ie a happiness of -5 will decrease popularity faster than a happiness of -1.
Having a higher popularity will increase how quickly people come to the castle. The game will give you an audible warning "People are leaving the castle" if your popularity drops below 50. This warning requires immediate attention. If people leave the castle, it can create a snowball effect where you're production begins shutting down. The game will also audibly warn you "Your popularity is falling" if it decreases for an extended period of time. This warning is less of a concern if you have plenty of buffer over 50. 
==== Taxes ====
Taxes create a passive monthly income, dependent on your population size. The chart below displays monthly income with 100 population. Each point represents a selectable taxing option. As taxes increase, you get less gold per happiness spent. With a population of 100, "Low Taxes" generate 30 gold per happiness a month (60 gold, -2 happiness). However "Downright Cruel Taxes" generate only 10 gold per happiness a month (160 gold, -16 happiness). Due to the large amount of gold per happiness, "Low Taxes" should be used as much as possible. 
Taxes scale linearly with population. Thus "Low Taxes" provide 0.6 gold per peasant regardless of population. This data is included in the "Useful Data" section of this article. 
Because "Low taxes" cost -2 happiness, while "No taxes" give +1 happiness, you use run Low taxes from 100 to 50 popularity, then use "No taxes" to recover popularity, creating an early source of income. Low taxes is the best tax rate to use for this since it generate the most gold per happiness spent. Additionally, when starting a multiplayer game, a player is given all 4 types of food as a starting resource. This provides +2 happiness for food variety, allowing for free income during the first few months only if "Low taxes" is selected.
Happiness lost to taxes must be gained by other means to maintain popularity. A player generates more income by using "Mean Taxes" (-8 happiness) in conjunction with double rations (+8 happiness), then they do by using "No taxes" and selling surplus food. However the optimal strategy changes when using Ale coverage and fear factor. For instance, with full ale coverage (+4 happiness), it is more effective to use "Average Taxes" (-4 happiness) and normal rations while selling all surplus food. 
==== Building Placement ====
Building placement in relationship to stockpile and storage directly affects the amount of goods produced per building as each worker must travel to/from the stockpile to their workstation, then to storage. Food production and weapon production especially should be placed in a manner that provides short distance from the stockpile and granaries/armories. Large walking distances can half production speed or worse. Attempt to not waste any space, but ensure to leave a pathway for workers to get into buildings and to/from storage. 
Some buildings are not effected by placement and should be placed far away from the stockpile to conserve space for other buildings. Hovels, stables, and fear factor buildings can be placed far away in even non-accessible areas and are just as effective. Inns require ale from the stockpile, but only require 1 trip every 6-7 months to grab a new barrel of ale. Thus Inns can be placed farther from the stockpile, only effecting initial start up. 
==== Early Game ====
Prioritize Woodcutter huts and apples for cheap population growth, wood for expansion, and a large surplus of food for early income. Apple orchards don't need to be by the stockpile and space is often plentiful early game.
==== Mid to Late Game ====
In the late game, players often need to be as efficient as possible with space. To do this, prioritize bread generation, although it costs more upfront. Additionally implement ale coverage and fear factor to optimize economy. Wheat farms have a production delay as farmers must plants seeds and watch the crop grow before they can harvest unlike apple orchards. For this reason, start by building wheat farms first as you transition from apple orchards. Then once the crop is fully grown, spend your precious wood on mills and bakeries for bread production. 
=== Ale Coverage: You should use it! ===
Inns have a somewhat large initial cost of 50 wood and 25 gold. But once they are built, they can generate a passive net monthly income of 0.705 gold per peasant per month by increasing happiness that can be used for taxes. This number comes from the following:
* For full coverage (+4 happiness), you need 1 inn per 30 population. (It is most cost effective to have exactly one inn per 30 population, since ale is consumed at a constant rate regardless of population)
* Each Barrel of Ale produces 160 flagons of ale when delivered to the inn.
* Approximately 23 flagons of ale are used per month per inn. (This equates to 0.144 barrels of ale per month.)
* Buying ale from the market costs 20 gold per ale. 
* Thus the cost of ale per peasant per month is approximately 0.096 gold, generating +4 happiness. (0.144 barrels per month * 20 gold per barrel / 30 peasants per inn)
* Average taxes give +0.8 gold per peasant per month, resulting in a net monthly income of 0.705 gold per peasant per month just by using inns!
You can use the market to auto-buy ale, without the need for growing hops and building breweries to create truly passive income. 
If taxing at -4 with ale coverage, you will make more money selling excess food on normal rations than you would taxing at -8 or -12 with extra or double rations. 
=== Fear Factor: You should use it! ===
Negative Fear factor increases the number of goods produced by production buildings, but decreases popularity and unit health. It does NOT increase unit damage output. A fear factor of -5 decreases happiness by 5 and decreases unit health by 25%, but increases goods produced by 150%! This bonus is applied when a worker drops off resources into storage. A wheat farmer drops of 2 wheat per trip with a fear factor of 0. This is increased to 3 wheat per trip with a fear factor of -5. An iron worker drops of 1 iron per trip with a fear factor of 0. With -5 fear factor, he will average 1.5 iron per trip, dropping off 1 iron on one trip, then 2 on another.
This effect is multiplicative when producing bread, since both wheat farms, and bakeries are effected by this boost (mills are NOT effected). A 150% increase from both leads to a 225% overall increase in bread production (1.5*1.5 = 2.25). This will require a different proportion of wheat farms to bakeries however. All the surplus can then be sold for more profit! Of course, lower taxes and extra rations will be needed to counter the -5 happiness.
This effect is also multiplicative with creating weapons. An iron mine with produce 150% iron, and then the workshop will produce 150% maces, swords, or armor from a single iron.
Due to the large decrease in unit health, consideration should be given to destroying fear factor buildings before engaging in a large battle with all your units.
Fear factor has a very large upfront cost to use. Each building costs 50 gold. Each level requires approximately one building for every 15 population. With 100 population, to reach fear factor -5, you will need to buy 35 buildings for a total of 1,750 gold! If you decide to destroy your fear factor after peace time has ended, you will receive half of the gold back, that is 25 gold for each Bad Thing you destroy.
Gallows should be used as they take up the least amount of space.
Positive Fear factor increases happiness and unit health, but decreases worker efficiency. Since it reduces production by so much, it is rarely used. The increase in unit health can be helpful for an all in rush of the opponent, a strategy covered in the combat guide.
=== Useful Data Summary ===
Sources of Income/ Happiness Data
Tax 	Happiness 	Income/Peasant/Month
No Taxes 	+1 	+0
Low Taxes 	-2 	+0.6
Average Taxes 	-4 	+0.8
High Taxes 	-6 	+1
Mean Taxes 	-8 	+1.2
Extortionate Taxes 	-12 	+1.4
Downright Cruel Taxes 	-16 	+1.8
Ale Coverage 	Happiness 	Cost/Peasant/Month
(buying ale from market)
Full Coverage 	+4 	0.096
Rations 	Happiness 	Food Consumed/Peasant/Month
Normal Rations 	0 	0.2
Extra Rations 	+4 	0.32
Double Rations 	+8 	0.4
Selling food on market 	Selling food on market 	Selling food on market
Any unit of food sells for 4 gold.	Any unit of food sells for 4 gold.	Any unit of food sells for 4 gold.