Value Added is the difference between an item’s price and the cost of producing it. The sources of value added are diverse, and include, for example, adding a brand name label, processing raw material into products, and offering service alongside a product. In Europe, value added is used as one basis of taxation. This is charged on the sale of goods and services, but intermediate consumers (such as a manufacturer buying raw materials) can reclaim value added tax paid on their inputs.
Glossary
Value Added Productivity
Value Added Productivity is a business metric. It is usually calculated as total value added, divided by the number of employees. It also can be used to monitor equipment, in which case it is value added divided by asset value. In both cases, it helps judge how well resources (inputs) are used to create output.