Step 2: Law of economics says that at every price level, there is a definite demand for the product. However, this law varies with nature of product, for example, commodity demand will fall with the rise in the price and for luxury good demand will rise with a price increase. Companies need to plot the demand curve with respect to price as to understand price sensitivity. This demand curve can be estimated using statistical methods by analyzing historical data or by perform price related experiments to understand what customers are willing to pay or through market research and putting the question directly to the customer.