The Process of Adding Value

Exam code: 7115

Written by: Ashika|Reviewed by: Caroline Carroll|Updated 2 July 2026

Adding value is the process of taking raw materials and using them in such a way that the end product created is worth more than the cost of the raw materials used to create it - value has been added
The added value is the difference between the price that is charged to the customer and the cost of inputs required to create the product or service
- E.g. Customers are prepared to pay more for potatoes when they are packaged as oven chips than they would be willing to pay for a bag of potatoes
- If value is not added to the materials and components that a business buys then fixed costs cannot be paid and no profit will be made
The greater the added value, the more successful the business is likely to be and the higher their profits

Product and marketing teams will constantly explore ways in which to increase the added value
- The most common methods have been summarised in the diagram and include branding, offering more convenience to customers, improving the product quality or design, and building out the unique selling points

Method	Example
Branding	Apple has built a brand that many customers believe is superior to other brands They have achieved this through the use of quality materials, innovative design and good marketing This branding allows the firm to charge a higher price for its products, thus increasing the added value
Convenience	Persil initially provided a bottle of dishwashing liquid for dishwashing machine use This resulted in spillage as customers added the liquid to their machines, so Persil then created tablets The tablets offered a much more convenient option and Persil was able to charge a higher selling price for them
Quality	Jo Malone perfume products are well known for their beautiful packaging, which creates an exciting opening experience for the customer This allows the firm to charge a higher price for its products, thus increasing the added value
Unique selling points (USPs)	MoonPig birthday cards can be completely customised (size, colour, design etc.) and the level of customisation has helped them gain a competitive advantage This customisation allows the firm to charge a higher price for its cards, thus increasing the added value
Design	Samsung Galaxy Watch 5 has robust health tracking tools built into it, along with an amazing screen, which has helped it gain a competitive advantage These features allow the firm to charge a higher price for its products, thus increasing the added value

The process of adding value