Value Added

value added definition



Value added is a measure of the contribution to a product’s worth by any organization that handles it on its way to the ultimate user.

Value added is measured by subtracting the cost of a product (or the cost of ingredients from which it was made) from the price that the organization received for it.

For resellers, this means the firm’s gross margin; for manufacturing firms, it means the contribution over cost of ingredients. Presumably whatever work that firm did is reflected in the higher price someone is willing to pay for the product, hence that firm’s value added.

Value added by marketing is the increase in the value received by the firm that is attributable to its marketing activities.

value-adding reseller (VAR) is a retail intermediary who modifies equipment, integrates several components into a system solution, or provides additional services to offer customized solutions to the customer.

VARs are found especially in markets for computer equipment and other forms of information technology.

See Also

Value analysis
Value in use
Value propositions


  1. ^ American Marketing Association, AMA Dictionary.

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