After reading discussions on "realistic prices" in a video game with a medieval setting, where people complained about supply and demand not having an effect in the game, i got thinking about how prices really worked in the middle ages.
There often was only one tailor, barber, blacksmith etc in an area so there was no competition. How did he know what do demand? When you came into a town as a traveling merchant, and you had for example barrels to sell, did the barrel maker guild have a say in the price?
Let's take an iron mine for example. Were there "independent" mining entrepreneurs or did the minerals belong to the local noble? If so how much could he sell his iron ore for? A local blacksmith couldnt really go somewhere else to buy it at a better price.
There often was only one tailor, barber, blacksmith etc in an area so there was no competition. How did he know what do demand?
The first part of your question is an economics question, rather than a historical one. We can restate it as: how are prices established in the case of a monopoly?
By definition, the realistic price of a good or service has to fall somewhere between the lowest the seller/provider is willing to accept and the highest price the buyer is ready to pay. When you have competition, the price tends towards the lower of these values, and when you have someone operating a monopoly, they can and will tend to gradually increase their prices so that they sell as close to the buyer's maximum as possible.
So, say, a barber operating alone would ideally price his services so that he is as as occupied as possible for the most amount of money.