What’s a value-added product?

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A value-added product has additional features that do not increase the cost of manufacturing and selling. It can be used to market a product or material, and may include services or high-priced items created from the same basic materials. For farmers, it can increase profits by creating products from their raw materials.

A value-added product is a product with additional features beyond what usually comes on similar products. In general, value-added features add little or no increase to the cost of manufacturing and selling the product. The inclusion of extra features at a low cost allows the manufacturer to offer an upgraded product in the same price range as other products that lack value-added features. In some businesses, particularly farms, a value-added product may also refer to a high-priced item created with the same basic materials as a lower-priced item that offers different or better characteristics than the original material.

Adding popular features to products is a common method used to market a product or material, as it can help increase sales and profits. In electronics, an example of a value-added product might be a laptop with a built-in webcam and microphone. While webcams and microphones are relatively inexpensive features to produce, especially when included as part of the laptop, they can make the laptop more valuable to a user looking for these features. When a customer makes a choice between products in the same price range, he usually opts for the product with value-added features, even if the features aren’t necessarily something he wants or needs.

Sometimes, a business can make a product a value-added product by including services with the sale of the product that might normally cost extra money. An example of using value-added services to increase the apparent value of a product is free product support or warranty coverage. A consumer who purchases two otherwise identical computers will more frequently choose the computer with value-added services over one without free coverage or service. For example, some manufacturers offer a one-year manufacturer’s warranty to give your computer more value than a competing system with a three-month warranty or no warranty included.

For a farmer or agricultural organization, a value-added product could be a product created from the raw materials produced by agriculture. For example, a strawberry grower who sells strawberries might also make strawberry pies and strawberry jam to increase the value of the strawberries to the consumer. Often a farmer can pay more for a product made from his crop than for the yield of the raw crop, increasing the profit made on the strawberries he has grown.




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