Added value

Added value:
the increased worth that a business creates for a product.

It is the difference between what a business pays for the product and the price that it is able to charge for the product/service.

Why is added value so important?

You have 3 minutes to come up with as many different ways as possible to add value to potatoes!

Calculating added value
Added value = value of output minus value of input

Farmer sells milk that cost him $300 to produce for $1000

Dairy factory puts the milk in bottles and sells to supermarkets for $2000

Supermarket sells milk to customers for $3500

How much value was added?

What can add value?

Untitled Slide

• Any process or change the raw material undergoes
• Branding
• Advertising