Market Value Added - MVA

And finance Allah shmoop How do companies add value All

right people think about the way people improve things Give

him you know that little extra Take ice cream Ice

cream is good but a Sunday is better The ice

cream palace charges four dollars fifty cents for two scoops

of ice cream but take those same two scoops and

add whipped cream chocolate sauce A handful of knots Bunch

colored sprinkles plunk a cherry on top Now they can

charge seven dollars fifty cents rights three dollars more Why

while they added value the whipped cream chocolate and sprinkles

make the tree way more special If Little Billy doesn't

get his sprinkles or his cherry on top well he's

going to throw a fit He's going to cry and

stomp his feet and generally make more than three dollars

of misery for his parents They might not think the

extra three bucks worth the stuff is worth the three

additional dollars it takes to turn ice cream into a

Sunday there But they definitely think it through the day

without a temper tantrum is worth those three bucks so

they fork over the money and it's likely all those

extra toppings cost the ice cream servers way less than

three dollars It was ah high margin product costume maybe

twenty five cents Fifty Send something like that huge contribution

of profits when they add on those three bucks worth

of stuff Okay next up What about water Well water

is fine It's cheap It keeps you alive But give

it that little extra and water becomes a health hydration

beverage Take water from the tap basically free Now add

some vitamin C powder Mix in some artificial blueberry flavor

and a little coloring Put it all in a bottle

and then slap a label on it Now you've got

Big Paul's bonus Health Hydration Beverage Five dollars seventy five

cents for a twelve ounce bottle Big value added big

profit margin to the cellar Well the concept of value

added describes the amount you increase the utility or the

quality or the value of a product to the buyer

through whatever process you deploy you get a product or

some raw materials You do something to it It gets

more useful or at least it gets generally better In

some way you've added value to it Turn warm secretions

into silk turns Silk thread in the fabric Turn silk

fabric into sheets You silk sheets to help give the

honeymoon suite at the Paluch a Ville Interstate Motel six

Cinderella Lodge It's special charm adding value all the way

at a back flap Toe prospector underwear There we go

Put satellite radio in your car Gee that's a good

one Add color to an old movie Good turn Pig

snouts and pigeon spleens in tow Hot dog Dodger Dogs

Put a bow on a puppy All value added situations

Or send Billy to stay with his grand parents for

the weekend so they can deal with his ice cream

addiction for a couple of days You know good luck

with that Definitely something his parents would consider value added

grandparenting Yeah can