What is Market Value?

Market value is what a product or service is worth on the open market. Imagine that Raymond has a cupcake factory in Chicago. The most he can charge for cupcakes in Chicago (and still stay in business) is $2.50. Chicago’s market value for cupcakes is $2.50. Raymond’s cousin, Rolanda, has a cupcake factory in Beverly Hills. Rolanda can sell her cupcakes for $4.00. The market value of cupcakes in Beverly Hills is $4.00. However, remember that market value is not necessarily the price one charges for something, but the price one could theoretically charge for something. For example, a certain used car typically sells for $6,000.00. Mark offers to sell his friend Dusty one of these used cars for $4,000.00. It would be appropriate to say that Mark is selling the used car to Dusty for $2,000.00 less than market value.