If you want to change the equipment and materia that the characters have at the start of the game, you'll need to hex edit kernel.bin3. The next incarnation of Wall Market should be able to do this the easy way, but for now, you must hex edit. Look at "Table 2: Character Record" on
this page. Open up your kernel.bin file (Wall Market can help you do this), edit what you want to edit, and use Wall Market again to put it back together.
So let's say you want Cloud to start off with an Ultima Weapon, Ziedrich armour and a Ribbon accessory: you'll need to change 0x1C from 00 (the weapon ID for the Buster Sword) to 0F (the ID for Ultima Weapon - Wall Market can help you find IDs for weapons, armour, accessories and materias, just change the ID from the decimal number to its hexadecimal equivalent), changing 0x1D from 00 to 1D will give him Ziedrich armour and changing 0x1E from FF to 12 will give him a ribbon. If you want to change his materia, edit the bytes from 0x40 to 0x7F, making sure that his weapon and armour have the right slots. What is in each slot is determined by four bytes, whereof the first is materia ID (look at the ID on Wall Market again) and the next three are the amount of AP the materia has (FF FF FF = master materia). So, if you want him to have mastered "Comet" materia instead of "Lightning" materia with 0 AP, change 0x40-0x43 from 34 00 00 00 to 40 00 00 00.
If you want to know about how the prices in shops work, look at
this thread.