The economic value is defined as the measure of the different benefits provided by the good or the service to the economic agent. It is generally being measured relative to the different units of the currency along with the interpretation is, therefore, to analyze that what is a maximum amount of the money a specific kind of actor is willing along with its ability to pay for the goods along with services. The economic value is the maximum amount of the money an agent will be paying for the different goods and services. The economic value of the item changes as per the quality or the price of similar or associated items changes. The different kinds of economic values of the goods and services include the brand value such as the recognition related to the brand along with the quality of the information which is being provided to the different customers who are the major customers of the company. On the other hand, the different consumer-related foods play a vital role in the different purchases which are being made by them.
The assessed value of the assets which is based on the overall ability to generate proper income is known as the economic value of the different goods and services. Furthermore, the economic value is not considered to be a similar aspect like market price or value and economic value is the most appropriate along with effective means in defining as well as measuring value and gain the usefulness of the different trade-offs while allocating the resources and gain the competitive advantage in the market in a possible manner. The measures of the economic value mainly depends on the different preferences of the individuals and economists in the market generally assume that the different individuals, not the government are the best judges of what they prefer to buy and purchase in accordance to the different kinds of options which have been provided by the companies to them in the market and it will be essential in improving the overall effectiveness in a positive manner.
The respective method helps in guiding the business on how the best price of the products and services can be and it will be suitable for analyzing the prices in an accurate manner as well. In calculating the economic value of the different goods and services, there are different kinds of aspects which are required to be followed and are as follows:
Determining the different kinds of value elements which impacts the customer in both positive and negative manner
Assigning of the monetary value for each and every element in a positive manner
Determining the selling price related to the product and the next best alternative which is available for the customers related to the different products and services which are present in the market
The cumulative monetary value of each and every element needs to be identified and it is considered as the total monetary value and it helps in identifying the different kinds of determination of the other alternatives which are present in the market in a more effective manner
Lastly, the selection of which is the portion of the total added value of the company which the company will be able to capture
What are some examples of economic values?
There are different kinds of examples of the economic values which is inclusive of the facts that are considered as follows:
With the new kind of flowerpot, there is the inclusion of two kinds of elements which are being valued and it is being provided to the different kinds of customers wherein it can be seen that the plants require fewer fertilizers along with less water
The decreased need of the different kinds of fertilizers helps in saving the customers $15 per flowerpot and in addition, the different customers save more than $5 per pot which is due to the low intake of the water which is being done
The other best alternative which is made available for the customers and for the new kind of flowerpot is the regular type of pot which is sold at $20 per unit
In the respective scenario, the EVC is considered to be the sum of the different value related elements which is considered to be ($20= $15 + $5) and the other best alternative which is available is $20 that is equal to $40 per the new flowerpot which is being available to the customers in the market in an efficient manner
The formula which will be used in calculating the economic value of the different products and services which are present is:
(Net investment) x (Actual return on investment – Percentage cost of capital)
The respective calculation helps in analyzing the fact that it helps in yielding more different kinds of reliable resources and results when a targeted organization has a large base of the assets. It helps in resulting and the results are less certain in nature when the different business-related activities have a large portion of the intangible kinds of assets present in it. From the respective example, it can be analysed and identified that when the respective organization has weak relationships with the different customers who are the targeted ones, there can be indication that the businesses have low insights in the different customers real value creation perspective which affects the morale of the employees in a negative manner as well.
In such kinds of scenarios, it can be identified that while launching the different products in the market which are new, it can be identified that there are different kinds of challenges which can be faced by the companies and they should be ready for such challenges as well. Therefore, in such scenarios, the different employees need to understand the overall perspective of avoiding the challenges that can be effective in the growth of the firm and gain a more competitive advantage in the market as well.
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