Prices are not literally numbers plucked out of the air or arbitrarily set by sellers in a market economy. Although you can set any price you want, these costs can only become economic realities if others are willing to pay them and that depends not on what prices you have picked, but on what prices are paid by other producers for the same products and services and what prices are charged by the same producers. Customers are prepared to pay.
And if you create something for a client that would be worth $100 and give it for sale at $90, that client would be worth $90. If any manufacturer sells the same product for $80., they will still not purchase it from you. Obvious as this might all seem the effects are arbitrary. For certain individuals, for instance, those who blame high prices on "greed" mean that a seller can set prices at will and make sales.
Now we need to look more closely at the mechanism by which prices distribute scarce, alternative-use capital. The case where the simplest explanation of how costs result in productivity in the use of finite resources if the customers want product A and don't want product B. But in more prevalent and more dynamic cases, prices are just as critical or more important.
Consumers, for instance, not only want cheese, they want yogurt and ice cream, as well as other milk-based items. How do prices help the economy decide how much milk each person should receive?
Consumers also bid indirectly for the milk from which these products are made when bidding for cheese, ice cream, and yogurt. In other words, the revenue from the sales of these goods is what helps farmers to buy milk again in order to continue producing milk. When the market for cheese rises, cheese-makers use their extra income to bid off some of the milk of their own product to satisfy the growing demand. Makers demand more milk, this increased demand forces all including ice cream and yogurt producers, to lift the milk price.
As the manufacturers of these other products are raising the prices of ice cream and yogurt to offset the higher cost of the milk they get, as do the customers. At these higher costs, less of these other dairy goods are likely to be purchased. How is any producer going to know exactly how much milk to buy? Clearly, they are only going to buy as much milk as they are going to repay their higher costs from the increased prices for these dairy products. If customers who purchase ice cream are not as discouraged by rising prices as yogurt buyers are, they will buy the product. A reduced ice cream production will produce very little of the extra milk that goes into producing more cheese and more will come from a decreased ice cream production.
As a general concept, what this all means is that the price one manufacturer is willing to pay for any given ingredient becomes the price that manufacturers are expected to pay for the same ingredient.