Battle rewards of all types other than PC need a rework, ISK vs Risk is completely skewed. Obviously you should be able to pull a better reward from any battle with better gear ie more functionality/survivability but such is often not the case. Even with the better rewards offered by the Pub matches it seems worthwhile to point out that one side wins and the other loses and Scotty is often drunk enough to make all the mercs on one side fresh out of the Academy but for a smattering of proto users, while the other team is fully squaded and plays PC on a regular basis. Risk vs reward then tanks for the side from the Academy and skyrockets for the PC players just by being in the battle. Higher Risk should entail higher payouts, and in this case the main risk is that Scotty is going to take a dump on you.

As for the number of suit that you can purchase if you do exceptionally in a Pub match, invariably it comes down to how many you can afford to replace after the match even if you win the WP ticker. I say this after being in several matches today where I was running only standard and advanced gear, and seeing first hand just how bad it can get. There is no way to really cut your losses other than to run starter or bpo suits if you are up against a stacked team. You will die more often and you will lose. Plain and simple. As a logi the problem can be a lot harder because without your good kit you stand to make far less wp than if you were to run even advanced gear. While you may be able to replace 4 or more suits if running standard suits in pub matches you will be receiving mid grade pay as well and still be receiving the equivalent pay to a WIN in FW batlle with only enough isk to cover your 1-3 fits listed. Certainly not what you want if you are looking to maximize your earning potential.

FW payouts though are terrible. There is no way at all to recoup losses, or to consider funding your gear by running faction gear.

IIRC ISK per LP is actually lower with STD and ADV items.

Try this calculation with proto.

This actually might make sense if you take into consideration the lower SP cost to use all the faction items. Basically it evens out the need for the user of the items to have the SP to use the regular gear, but until we have the ability to sell stuff this still is a lose lose system that we have in place, look forward to a market soon (not TM).

I don't see FW being more profitable than public contracts unless something changes.

Honestly it is kinda annoying that they turned FW into an ISK sink more than anything, the lack of ISK rewards in it make no sense. EVE missions rewarded you with LP for the corp/faction you did it for as well as ISK, why can't we do that.

U are correct LP rewards per match is less isk value than public matches,to buy items such as basic shield extender and G38 rifles yields very poor return,however some the items u buy with LP are not available for isk.
One would assume that FW is not intended to be a mercs sole occupation and that FW play should be augmented with public and PC games.
This leads into a diverse play experience as u may find yourself playing a couple of dom, couple of cal FW an ammar FW, then turning up to defend or attack a PC district (and hopefully a few rounds of PVE soon). You could be using a mix of isk and LP to create all manner of fits, some items u don't have skills for, weapons that have less fitting, equipment with better attributes (State Wyrkomi injector, 100% armour upon revival!!).

In conclusion a small increase in LP payout may occur, but i don't believe it is necessary, but what may be interesting and fun to have is LP store discount sales, or FW events with increased payout/standing increase.

Surely their uniqueness and exclusivity raises their value enough, i myself play FW for the interest of helping to organise bigger groups of players alongside eve orbital support, the LP on both games is just a pleasant side effect.