To eliminate the problem definition of “price” of some companies simply use the method for determining the market price of the transfer price. The price the market is seen as a goal amount of hands to measure that simulates the purchase price was given and paid if the subunits are independent, autonomous company. If sale is a division operated effectively against its competitors, it should be showing product benefits of moving services to the market price. Also, the effective functioning of the buying unit should not be disturbed by the market based transfer pricing because it is what should be paid for goods or services if the option of buying a house is not there.
However, some problems may exist with the use of market prices for transfers within firms. First, transfers may include products that are not exact counterpart in the external market. Second, no market price is completely appropriate, since domestic sales can provide cost savings by reducing bad debt and / or packaging, advertising, or delivery costs. Third, if the foreign market is experiencing a temporary reduction in demand for the product.