What Is a Value-Added Product?

A value-added product is a saleable commodity that has been enhanced with additional qualities that make it worth a higher price than the raw materials used to make it. It🌸 may⭕ be made more convenient, more attractive, more palatable, or easier to use than its raw ingredients.

Adding value explains why businesses are able to sell the♉ir goods or services for🌳 more than they cost to produce.

In marketing, the added value is a succinct message to the consumer about the characteris♒tics that make a product worth more than its raw ingredients and, just as importantly, why it i👍s preferable to similar products from competitors.

Understanding Value-Added

Value-added is the difference between the price of a product or service and the cost of producing it. The price is determined by what customers are willing to pay based on their 澳洲幸运5开奖号码历史查询:perceived value. Value is added or created in different ways.

These may include, for instance, extra or special features added by a company or producer to increase the value of a product or service. The addition of value can thus increase the product's price that consumers are willing to pay. For example, offering a year of free tech support on a new computer would be a value-added feature. Individuals can also add value to services they perform, such as bringing advanced skills into the workforce.

Consumers now have access to a whole range of products and services when they want them. As a result, companies constantly struggle to find 澳洲幸运5开奖号码历史查询:competitive advantages over each other. Discovering whatꦆ customers tru𒁏ly value is crucial for what the company produces, packages, markets, and how it delivers its products.

Bose Corporation, as an example, has successfully shifted its focus from producing speakers to delivering a "sound experience," or when a BMW car rolls off the 澳洲幸运5开奖号码历史查询:assembly line, it sells for a much 🎃higher premium over the cost of production because of its reputation for stellar performance, German engineering, and quality parts. Here, the additional advantage has been created through each brand's symbolic value and years of refinement.

Value-Added in the Economy

The contribution of private industry or a government sector to overall 澳洲幸运5开奖号码历史查询:gross domestic product (GDP) is the value-added of an industry, also referred to as GDP-by-industry. If all stage🌄s of production occurred within a country's borders, the total value added at all stages is what is counted in GDP.

The total value added is the 澳洲幸运5开奖号码历史查询:market price of the final product or service and only counts production within a specified time period. This is the basis on which 澳洲幸运5开奖号码历史查询:value-added tax (VAT) is computed, a s🐻yst🅠em of taxation that's prevalent in Europe.

Economists can in this way determine how much value an industry contributes to a nation's GDP. Value-added in an industry refers to the difference between the total revenue of an industry and the total cost of inputs—the sum of labor, materials, and services—purchased from other businesses within a reporting period.

The total revenue or output of the industry consists of sales and other 澳洲幸运5开奖号码历史查询:operating income, commodity taxes, and inventory change. Inputs that could be purchased from other firms to produce a final product include raw materials, semi-finished goods, energy, and services.

Value-Added in Marketing

Companies that build strong brands increase value just by adding their logo to a product. Nike can sell shoes at a much higher price than some of its competitors, even though their production costs may be similar. That's because the Nike brand and its logo, which appears on the uniforms of the top college and professional sports teams, represents a quality enjoyed by elite athletes.

Similarly, luxury car buyers considering a BMW or Mercedes-Benz are willing to pay a premium price for their vehicles because of the brand reputation and ongoing maintenance programs 🐎the companies offer.

Amazon has been a force in the e-retail sector with its automatic refunds for poor service, free shipping, and price guarantees on pre-ordered items. Consumers have become so accustomed to its service that the🦹y are willing to pay for Amazon Prime memberships because they value the free two-day turnaround on orders.