They do cost analysis. Basically you determine how much all the parts (or ingredients) cost, how much to assemble the parts, overhead (rent, electricity, labor, etc), and add in a certain amount of profit. There are many other things that go into the cost like wear and tear on equipment, etc. but you get the idea.

In economics class I learned about demand and supply and about the equilibrium and such. Now, the textbooks talk about how the market sets the price because its what consumers are willing to pay for such product and at what price they are not willing to pay. My question, though, is how do the ones supplying those products and services know how much to charge for their specific products/services? For example, McDonald's and Jack in the Box are in the hamburger fast food business, but their products/services and prices are not the same. What methods do they use to come with the most profitable price?