I see this debate is still going on. Defining the word value seems to be the key. To me Value is a nondescript word or an intangible that has no monetary number attached to it. Every time you make a pen using a pen as the example again, you are including cost or price not value. Someone makes the same pen and adds a segmented blank, he or she did not add value they added cost. Weather a person sand with the grain or uses epoxy instead of CA does not add value, it adds cost. Now you get done making this expensive pen, where is the value??? How much is the value??? It comes with a selling price and to get that price you took all materials, and labor costs to arrive at it.
To me what I see as "added on value" is again that intangible. Take that pen and give it to the President and he signs some Bill with it. You now added value to it. Same pen nothing added. How much value or what is the number is indeterminable because it will be the person who buys it that determines it for the time being. Sell that pen again in a year and the value will change again.
Another example. Take that same pen and sell at a craft show now sell it in Tiffany's and it now has "added on value" just because of the name.
To me that is what I am reading into this. We will have to just agree to disagree.
John, I gave you the definition of value added I am asking about. I am not asking about selling price. Forget selling the finished pen that involves a lot of things not related to the value added by assembling the pen.
Think more like this and make it for just part of a completed pen...there is a pen blank of common acrylic sized for common single bbl pens that was purchased for $1.75 and a similarily sized pen tube that was purchased for $1.00. The parts are worth $2.75.
Now prepare that blank for use making a pen, drill it, insert the tube, square it, turn it. polish it and finish it - now it is ready to use as a pen bbl. What is the blank worth?
If it is now worth $7.75 the value added is $5.00.
That is not directly related to the market value which depends on many many other and unrelated factors. Venue, advertising, packaging, shipping. service after the sale, and warranty work to name just a few.