Value added

Value added is the incremental change in the value imparted to a product by a company. The level of value added frequently drives the amount of profit that a business can realize from its product and service sales. The value added concept requires a close examination of the needs of customers, to add features for which customers are willing to pay an increased price. When a business has an ingrained ability to add value to its products, the organization is better able to earn an above-average profit over the long term. The value added concept is closely associated with branding, where customers are willing to pay more because they associate a high degree of usability and quality with the offerings of a specific business.