eli5 how do people find the sweet spot between supply and demand when pricing things?

Question

is there an actual formula companies use to calculate what the perfect price of an object should be?

In: Economics

Answer 1

you do research. Most goods have a market already, so you just see the pricing of similar things in the market. Then, you can adjust from there if your price doesn’t produce the revenue you want.

if it’s a unique product, then you essentially just determine your profit goal based on the cost to make it and go from there. But……even “unique” stuff has something similar usually that can give you an idea of the market.

Then there is stuff like art which is often literally unique and there really is no market. A piece of art might sell for millions and a similar piece sells for $200.