VALUE ADDED

The idea of added value is used in the fields of accounting , finance and economics . One of the meanings of the concept refers to the economic value that a good gains when it is modified within the framework of the production process.

Value added

This means that, in a context, added value is the economic value that the production process adds to a good. Suppose a table made of natural pine wood, without any treatment, has a selling price of $ 200 . If an antibacterial product is applied to said table and varnished, its sale price becomes $ 280 . The value added by this process , therefore, is $ 80 .

Beyond this simple example, technology and industrial processes are often the tools that add the most value to a good. Therefore, for the economy of a country , the ideal is that there are advanced industries capable of transforming raw materials to generate more added value. If a nation only sells raw materials, it will create little value.

For accounting, value added is the difference between the production cost and the price of market . An automobile manufacturer spends 15,000 pesos to produce a vehicle that later, in the market, sells for 32,000 pesos . The added value for the company is 17,000 pesos per car. Keep in mind that these examples are only theoretical, since there are other factors that affect prices (such as taxes, for example).

The Value Added Tax (known by the acronym VAT ) is a tax that is applied to consumption: the buyer pays it when purchasing a product. It is an indirect tax since the buyer does not pay it to the treasury, but it is the seller who receives the money from the buyer and then must pay it to the State .

It should be mentioned that the concept of added value is also known by the name of added value , and the only difference usually refers to regional issues. However, the latter is more common to speak of high added value , a characteristic of those activities that can make a product rarer.

Value addedWhen high added value is mentioned in the field of politics or journalism, the objective is to refer to everything that leads consumers to desire a particular product more than its alternatives. On the other hand, from the manufacturers point of view, high added value reduces production costs .

An item pigeonholed into this group may fill a need that no one else can, or even "create" one or more that consumers were unaware of having. The high added value, in short, is typical of any product that is synonymous with innovation, especially when new technologies are used for its production and when it includes them to provide extraordinary benefits .

It is not difficult to recognize the high added value in a product, since it is usually noticed in its design , in the way in which it is advertised, in the options it offers to its users and even in its price , which is usually very competitive.

To obtain a relative profit greater than that of the competition, a company has several options, such as the following:

* offering exactly the same at a lower price, so as to jeopardize the permanence of other companies in the market, thanks to the combination of a large volume of sales and a lower than normal production cost ;

* Presenting a new need to consumers, sometimes also eliminating another.

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