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What is Value?

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Value is the worth, importance or usefulness of something. This has several common variations:

Business Value

Business value is sum of all benefits that a firm can generate for its stakeholders such as investors, employees, customers and communities. The value of a business includes its capital, assets, know-how, social capital, organizational culture, business capabilities, brands, products and services. It can be judged by the total future revenue of a firm and its total future impact on the quality of life of employees and communities.

Marketing Value

Marketing value is the perceived worth of products, services and experiences in the minds of customers. This is largely based on how well a firm fulfills customer needs and matches customer preferences. It is also influenced by brand recognition and brand image.

Investing Value

Investing value is the sum of all future income streams generated by an investment discounted to present value. Calculating the value of an investment requires estimates of risk and reward. As with any estimates of the future, these are prone to be inaccurate and may change rapidly based on factors such as market conditions and the performance of a firm.

Economic Value

Economic value is the maximum price or opportunity cost an individual or organization is willing to pay for capital, assets, products, services, information and experiences.

Value vs Price

Value is the maximum price an individual or organization is willing to pay. Price is the lowest price that is currently available on a market. In theory, individuals only buy when value exceeds price. When value is much higher than price a product or service might be considered a "good value."

Example

A professional photographer can earn $10,000 of net income a month with a camera. A camera lasts two years. As such, the photographer can earn 24 × 10,000 = $240,000 with the camera. It can be said that the value of the camera is $240,000 to this particular individual. The price of the camera might be closer to $5,000. This can be viewed as a good value for the photographer, as value greatly exceeds price. A photographer who can earn $100 a month with a camera, would not place as much value on a camera and would be likely to buy a cheaper model, assuming it was a purely business decision.
Overview: Value
Type
Definition
The worth, importance or usefulness of something.
Related Concepts

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