Is the price of something determined by how much it costs to make or how much someone is willing to pay for it? I believe the correct answer is "It depends and

Is the price of something determined by how much it costs to make or how much someone is willing to pay for it? I believe the correct answer is "It depends and both". If you think it's just cost+profit then, prices will rise only by the percentage of which labor is a part of that price. In the restaurant industry, for example, labor costs are about 35% or the total costs. If wages increase 10%, costs increase 3%.