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Formula for Added Value to Business

October 02, 2011

Value is equal to the benefit of a purchase minus the costs. When customers make a purchase, they not only consider the price but the overall value of the product package. Are you providing a good value?

Business Tips Article
Jessica Lambert
ASU-SBDC Training Coordinator


SAN ANGELO, Texas — Value is equal to the benefit of a purchase minus the costs. When customers make a purchase, they not only consider the price but the overall value of the product package.

Are you providing a good value?

For example, when a restaurant sells a plate of food to a customer, that customer walks away with more than just a full belly (hopefully). Other benefits people enjoy by going out to eat include a relaxing and clean environment, having attentive and pleasant servers, and enjoying food presented in an impressive and appealing manner.

The food must be good, but it goes further than that. Are you missing opportunities to improve the value of doing business with your company?

Benefits include everything positive about a product and the business exchange. One benefit your business can provide is ease of purchase.

Why are we willing to pay more for goods at a convenience store? Because it is a small store with shorter lines at a convenient location. You pay more for the ease of that purchase.

Another benefit is how your product is perceived socially. Will your friends or colleagues be impressed by your purchase?

In marketing there is a theory of a “thought leader” in groups of people. In secondary school it was easy to spot these trendsetters but, no matter our age, we are always looking up to someone even if we do not realize it.

This is why many companies will give celebrities free samples of their goods in hopes that they will be photographed with said items, and their fans will want to emulate them. Even nightclubs or restaurants will comp high-profile clients to improve the perceived value of the restaurant. Could you put your goods in the hands of influential people?

Another way to increase value is to decrease costs. Are you adding costs to people who do business with you? Cost is not only the price of a product or service, but also includes everything negative about doing business.

When I go to a store, and the inventory is not organized, I know it will take me longer to find what I am looking for. That time is an extra cost to me that I must consider if I decide to shop there. Unfriendly staff, not accepting credit cards and inconvenient hours are also examples of costs that can negatively affect shoppers.

As online shopping became increasingly popular, many brick-and-mortar businesses feared they would be priced out of business; however, there are always additional costs to doing business online. These costs can include extra shipping costs and time.

If you decide to purchase online, you have to be willing to wait for the product to arrive. Another cost is the inability to test or try on something you are considering buying. You can focus on this benefit if you have a brick-and-mortar store.

Finally, don’t forget to communicate your benefits to your customers and potential customers. If they do not know about a benefit, it cannot help influence their decision.

You can increase the value of your business by either increasing benefits, or decreasing costs to people doing business with you. Benefits and costs are more than just the dollar value, so take time considering the ways you can improve the purchase package to increase the value of your products and services and increase sales.

Business Tips was written by Jessica Lambert, business development training coordinator and certified training coordinator of Angelo State University’s Small Business Development Center. Contact her at


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