Customers who buy something from you want to receive something in return, whether that’s a service or tool that allows them to achieve a certain goal. That’s a given.
But as a business, you can also add value to your products by offering additional benefits to your customers beyond the product or service itself.
This is called ‘added value’, and can help your business attract more customers.
If you’re a new business owner, you might be unsure where (or how) to add value. Read on to find out:
- What is added value in business?
- Why do you need to add value?
- How can a business add value?
What is added value in business?
Added value is exactly what the name suggests: value you add to your product or service.
For example, if you’re a personal trainer and offer clients free access to your nutrition guide, that’s added value.
Or another example would be if your carpentry business offers trim services (installing mouldings) as part of your handiwork.
There are multiple ways of making your product or service more desirable to customers. We’ll get into the most common ones later.
Why do you need to add value?
Long story short, the more value you add to a product, the more you can increase your business’ value to customers.
By adding value, you can:
- Increase your prices
- Improve your sales
- Stand out from the crowd
- Stop businesses from undercutting you
Increasing the worth of a product or service can also boost the demand for it. The more desirable something is, the more people want it. This, in turn, can expand your audience or let you charge a higher price for your product or service.
Although, be aware that f you raise your prices, your existing customers have to think this is a reasonable change. Suddenly doubling the price can seem greedy and put off your current audience.
That said, the better you become at adding value to your product or service, the more profitable you’ll become. Do it right, and this can lead to significant business growth.
Tip! To learn more about raising prices correctly, see our guide about how to notify customers of a price increase.
How can a business add value?
Depending on the business and product, there are multiple different ways you can add value to a product.
Production
The most well-known way to increase the value of something is by changing it into something else. A food truck turns raw ingredients into a delicious meal. A carpenter turns wood into rooms, furniture or carvings.
If your business is customer-facing, you’re unlikely to add value through production.
Brand name
For luxury brands, like Chanel, the designer name adds value (and the sale price increases accordingly).
Functionally, a Chanel handbag is not very different from an unbranded handbag. Instead, it’s the prestigious Chanel name that increases an item’s perceived value.
The name doesn’t always have to be a luxurious one. If a brand name is associated with quality, that too can add value to particular products. Nike or Apple ring a bell?
Extra features
Sometimes, a company adds value to a product by changing it before it’s sold to the public. Most businesses involved in technology focus on what they can add to tempt more customers.
Take mobile phones, for instance. Every time Apple or Samsung releases a new device, they boast about their latest features.
Whether it’s a better camera or a more impressive display, the new features are how these companies try and persuade you to buy their phone.
Customer service
Value added isn’t always a money-related figure; sometimes, it can be an emotional one. If your business can provide a great customer experience, this can add significant value.
This is more common when dealing with services instead of products.
If you offer excellent customer service, people will likely choose you over a competitor that doesn’t.
Convenience
In a world where everything is instant (entertainment, information, products), convenience is probably the most significant way of adding value.
For example, Amazon’s business structure largely revolves around providing convenience for their customers. Amazon Prime takes this one step further, where customers pay a subscription for perks like Same or Next Day delivery.
If a customer can order the same product from two businesses, they’re more likely to choose the one with better delivery times.
Convenience doesn’t just mean delivery times. Making your products easy to use also counts.
Take ready meals, for example. They’re incredibly popular because they save people from needing the time and skills to cook an enjoyable meal.
Unique selling point (USP)
Sometimes, a business does something completely different to its competitors to add value.
For example, furniture giant IKEA’s well-known USP is good-quality products for lower prices since customers assemble them themselves.
Find out what your business can offer that nobody else can, and make sure you communicate that to your customers to add value to your brand.
Where can I learn more about this stuff?
To know how to increase a product’s value effectively, you need to understand the audience properly. Building a focus group can be massively beneficial here but challenging to set up.
Read our guide about how to conduct a successful focus group to dig up details about your target audience that you can use to add value.
Of course, adding value usually requires some funding. If you don’t have enough personal funds to invest, why not apply for funding?
Have a look at our guide about writing a business plan for a funding application to help you get financial backing when you need it.
Managing your business’ finances is a lot easier when you can see exactly where your money is going. If your current account isn’t quite cutting it, try the Countingup app.
This two-in-one business current account and accounting software makes monitoring your money a cinch! It’s got loads of useful features, like automatic expense categorisation and receipt scanning.
Now you can spend more time focused on adding value to your business.
Download the Countingup app for free.
