I was thinking, it would be best to have 10 factions. We also need to add the Swamp and "Storm and Lightning." This faction would have storm dragons at level 7, elf snipers at level 5, pegasi at level 4, a philosopher-mage at level 3, and a dwarf merchant at level 2.

Which part of the Heroes game are you designing this faction for – Heroes 5 or Heroes 3?! :cool:
Only the ancestors at 3DO allowed themselves to create such a hodgepodge of factions – Rampart... where racial differences didn't really matter, and it turned out that a centaur, an elf, and a dwarf could stand side by side in the same army – 3 different representatives of races...
In Heroes 5, they put an end to such inconsistencies and separated dwarves from elves and centaurs, thereby creating more or less "logical factions" in all respects, including the composition of units...
So, there's no need to have dwarves and elves from the same city...
Snipers – they are snipers – why call them elves again and put them at level 5... any elf will give these snipers a run for their money – because elves are the best archers in the world of Ashan...
Philosopher-mage... well, if we are creating elves, then it doesn't work either – again, racial incompatibility...