PEV - Added Value

Re:PEV - Added Value

Value added is when you determine the wealth of a company.


Value added = sales less cost of purchases - brought in services.

There is very little in the books but you may be asked to work out the value added per employee or labour hour.

Also the term value engineering has cropped up in the past.

Value engineering is used to try and reduce costs and design a produce using the most simplist method without effecting the quality.

Re:PEV - Added Value

Hi Laura

As I understand it Added Value means increasing the potential selling price of a product without increasing it's cost. Or deceasing its cost without effecting its saleable value.

The value of a product is measured by its value in use ie; the value the customer feels it is worth.

Some products are valued on their prestige or status for example designer clothing. Value may be added as the product becomes more popular perhaps because Steven Gerard is advertising it! The cost of getting Gerard to do the advertising needs to be covered by the increase in value or there will be no value added.

Other products for example a tin of beans in a supermarket cannot have an increase in price as competitors may have them priced lower and and increse will mean loss of custom. Value can only be added by decreasing costs. The customer may not care what colour the tin is or what material is used alternative material may be availible at a lower cost. If the products material is changed then costs will be reduced without reducing the value in use, so value will be added.

Hope this helps.

Louise