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A primary objective to win is to expand with minimal loses but players have few reasons to build multiples of a structure after your first one unless it has some unique faction-wide bonus that stacks. The result is settlements get "specialized", typically turning those that won't need to create units into purely resource generating ones, usually to sustain higher upkeeps with a couple hero increasing cap buildings if the building slots allow.
Often a complaint follows that players don't build lower tier units after better ones are unlocked. Players would be incentivized to build out proper infrastructure (and build lower tier units) if the supply line penalty mechanic is linked to the units (recruitment cost and upkeep cost) instead of the lords. Lords already have an upkeep and the logistical challenges are probably represented more faithfully via the building chains to support the specific units. For example, the infrastructure required to support harpies is different than dragons, so any penalties should be linked to the number of buildings a player has relative to number of units in the field (sending supplies, replacing troops).
Replacing the lord linked supply line system with a generous unit-building linked soft recruitment cap that adjusts marginal unit upkeep would be more complex but better represent the simulation the game is attempting to depict. A soft cap logistical capacity mechanic would increase marginal recruitment and upkeep for the next unit recruited after the capacity is breached. Likewise, the upkeep would be reduced when the player builds a corresponding building that increases the soft cap. Baseline the building soft cap relative to the number of settlements that should be required to field a "doomstack" plus extra.
For example, how many settlements (assuming 1 building per allowed settlement) should it take for a Dark Elf player to field an entire army without penalty with units from the following building chain:
Harpies - Harpy Roost - 30 per building (roost) Feral Manticore - Beastmaster's Stable - 15 per building or two settlements War Hydra - Beastmaster's Stable - 7 per building or three settlements Black Dragon - Dragon Hatchery - 5 per building or four settlements
Assume for the purposes of this example a 10% increasing recruitment cost and upkeep penalty for each unit greater than the unit cap. If the player had one dragon hatchery and 5 black dragons already in the field but wanted to recruit another 5, then without building another dragon hatchery the next 5 black dragons would cost to recruit and upkeep: nbr rec cost upkeep 6 2310 577.5 7 2520 630 8 2730 682.5 9 2940 735 10 3150 787.5