Pardon the ramble... Feel free not to read. But FWIW:
While the above formula matches some of the minimum/maximum buyins at my nearest casino (not quite exactly—it works for their 2/5 game, for example, but not their 1/2 game), my own feeling is that home cash games are a different animal, with each setting and group having different ideal set-ups.
In the home cash games I have played in regularly or semi-regularly, I would say there are three main considerations for their hosts (to the extent that they think consciously about game structure at all):
1) The players’ financial situations;
2) The players' skill levels; and
3) Whether they play more for fun, or for profit.
For each of these three items, it matters not just how each player is situated, but how much variation there is among them.
The biggest challenge I sometimes see comes when there is a lot of diversity in players' finances, their skills, and their goals. If everyone has about the same amount of money to spend, has a similar skill set, and has a similar outlook on the purpose of game, setting it up is easy. It can get stale, but there aren't many tensions.
But if you have some friends for whom a $100 buy-in is a stretch, but others who would be happy to sit down with $2,000 in front of them, then getting a game together is not so simple. Someone is going to be unhappy, or left out. I tend to lean toward trying to make it possible for the less affluent players to get in the game, without making it so cheap that we can never attract better-bankrolled players.
Meanwhile, if several players are much better than the rest, and take everyone else’s money very consistently, the game tends to fall apart, unless there is something else about it that makes up for it (in fun, or learning, or some other draw, such as watching Monday Night Football simultaneously). Unless the losing players just have so much money that they just don’t care they have to have some other reason to keep coming back.
Some examples:
I know of an infamous home game in my region which is hosted and attended mainly by wealthy professionals. The stakes are high, with the potential for a big score. Several friends who attend this game regularly say that the host and his friends are jerks; they would normally never choose to spend an evening with them. *But* the core group are apparently lousy at poker, and the game can be hugely profitable for smart players who are willing to tolerate the main group’s behavior. In a game like that, if you are properly bankrolled and think you have a serious skill edge, it would be great for the stakes to be high and for the buy-in structure to allow you to play very deep... It just happens that I have no interest in joining such a game, even though I’m bankrolled for it and it sounds like I might make some good money there, because I value the social component of poker too much. If I want to play just for money, I go to a casino.
On the flipside, I have sometimes played in another home game where the host and the players don’t have that much money, and mainly play for laughs. It is a very gamble-y game, with ultra-low buy-ins. The play is mostly shortstacked, with people repeatedly buying in for $20 and taking crazy shots. It is sometimes a lot of fun, but I rarely go anymore because of the BINGO play. The buy-in structure greatly reduces your skill edge, and means that over time pretty much everyone is just passing money back and forth. You go way up and way down on each game night, and over the course of several months everyone winds up pretty much even. It can be fun, but not a place where you can really work on your game, except I suppose for dealing with that very particular environment.
In my own game, I continue to feel the challenge of setting buy-ins and structures (for both cash and tournaments) which balance the interests, resources and abilities of a relatively diverse group. I have a roster currently of about 25-30 invitees, and work hard to keep up a regular twice-monthly turnout of 14-18 players. I have been tweaking the details of my poker night every six months or so to keep it going, so far with success; but it requires constant attention and periodic adjustment.
I know, TL;DR, but for the few who got this far down, I am curious what thoughts if any you have on the above.