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Added Value can also be defined as the difference between a particular product's final selling price and the direct and indirect input used in making that particular product. Also it can be said to be the process of increasing the perceived value of the product in the eyes of the consumers (formally known as the value proposition).
Value added is a term in financial economics for calculating the difference between market value of a product or service, and the sum value of its constituents. It is relatively expressed to the supply-demand curve for specific units of sale. [ 1 ]
Value added selling is one of several sales techniques that relies on building on the inherent value of a product or service. [1] By its nature the value add technique is a more flexible and customized selling approach that requires input from a defined range of average customers .
There are two types of value-based pricing, which are: Good Value Pricing; Value-Added Pricing; Good value pricing describes that the product or service is priced in relation to its quality. While value-added pricing refers to the price given to a product or service in relation to the perceived value it adds for the consumer. [9]
In accounting, as part of financial statements analysis, economic value added is an estimate of a firm's economic profit, or the value created in excess of the required return of the company's shareholders. EVA is the net profit less the capital charge ($) for raising the firm's capital.
Marx's term is the German word "Mehrwert", which simply means value added (sales revenue minus the cost of materials used up), and is cognate to English "more worth". It is a major concept in Karl Marx's critique of political economy. Conventionally, value-added is equal to the sum of gross wage income and gross profit income.
In the example given earlier, of making a cup of coffee, the constant capital involved in production is the coffee beans themselves, and the variable capital is the value added by the coffee maker. The value added by the coffee maker is dependent on its technological capabilities, and the coffee maker can only add so much total value to cups of ...
The value-added of an enterprise can be said to represent the potential for profit. Mature technology, low cost requirement for entry, and universalization of technology make it easy found a so-called "low-profit" enterprise, also known as low-value-added industries.