One may calculate a market price using the economic theory of supply and demand. The market price of a service or good is determined according to the law of supply and demand, which takes into account both the available supply and the demand for that good or service.Because of the scarcity of supply, the price of a good or service goes higher when its demand exceeds its supply. The converse is true when supply is abundant and demand is low, leading to a decrease in price.The equilibrium price occurs when supply and demand balance each other. You can analyze the market circumstances to derive this price. The optimal pricing is the one that allows companies to earn profits while being accessible to their target demographic.Cost-plus, value-based, and dynamic pricing are a few methods to set prices responsive to market conditions. Analyzing supply and demand directly ties a company's ability to charge a competitive price for its wares.