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What is a Value Added Product?

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  • Written By: H. Bliss
  • Edited By: W. Everett
  • Last Modified Date: 18 September 2016
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A value added product is a product with additional features above and beyond those that usually come on similar products. Generally, value added features add little, if any, increase to the cost of manufacturing and selling the product. Including low-cost extra features allows the manufacturer to offer an upgraded product within the same price range as other products that do not have the value added features. In some companies, particularly agricultural companies, a value added product can also refer to a high-priced item created from the same basic materials as a lower-priced item that offers different or better features than the original material.

Adding valued features to products is a common method used to market a product or material, since it can help increase sales and profit. In electronics, an example of a value added product might be a laptop computer with a built-in webcam and microphone. Though webcams and microphones are relatively cheap features to manufacture, especially when included as a part of the laptop, they can make the laptop more valuable to a user seeking these features. When a customer is making a choice among products within the same price range, he will usually opt for the product with value added features, even if the features are not necessarily something that he wants or needs.

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Sometimes, a company can make a product a value added product by including services with the sale of the product that might normally cost extra money. One example of using value added services to increase the apparent value of a product is including free product support or warranty coverage. A consumer buying two computers that are otherwise identical will most frequently choose the computer with the value added services over one lacking free coverage or service. For example, some manufacturers offer a one-year manufacturer's warranty to give their computer greater value than a competing system with a three-month warranty or no included warranty.

For a farmer or agricultural organization, a value added product could be a product created from the raw materials produced by farming. For instance, a strawberry farmer 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 charge more for a product made from his crop than for the raw crop yield, increasing the profit made on the strawberries he grew.

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