Derived demand is demand for one product that exists because consumers want another product.
The classic example is labor: demand for construction workers is derived from demand for buildings, houses, and infrastructure. Likewise, demand for steel can be derived from demand for cars, appliances, and construction projects.
Derived demand is especially important for factors of production, including labor, machinery, land, and raw materials. If demand for the final product falls, firms often reduce their demand for the inputs used to make it.
It differs from joint demand, in which two goods are wanted together, such as a printer and compatible ink. It also differs from autonomous demand, which does not depend directly on demand for another good. Derived demand can therefore transmit changes through supply chains.