When you go shopping, you probably make price comparisons between the different products that catch your attention, and you probably wondered what makes the difference between the price of one product and another (especially if they are of the same nature).
Certainly the allocation of the price of a product within the market is not an arbitrary event, is the result of the analysis of certain characteristics of the product itself, the consideration of market needs, etc.
The fair valuation of the product and the development of profitable projects, allows maintain a healthy economic relationship between the market and the consumer.
What is an economic value?
As established by the United Nations Food Division (FAO), economic values constitute those variables that allow us to obtain an economic perspective of the value of a good or service, which are the product of one or more development activities.
There are techniques that allow raising the value of the product, by creating a background that raises the need, or by events that change the market's perception of it.
Factors that affect economic values:
Negative monetary values
The costs associated with the product are covered here. They are the expenses required to position the product, including:
- Workforce: Here the human material required for the production of the good or service is taken into consideration.
- Shipping cost: It considers the means and the routes to follow to position the product in the market, from the point where it is developed.
- Raw material: refers to the inputs that are needed to complete the positioning of the product in the market.
- Transformation activities: Here the term "product surplus value" comes into play. Many times the products that are subjected to transformation activities increase their value, since a product according to their needs is made available to the consumer. For example, the cost of peeled garlic is usually higher than that of garlic in its natural state, since not only is a product (garlic) offered, but a service (ready-to-use product) is also available to the buyer.
Positive monetary values
It refers to the benefits reported by the product or service, in an economic or monetary sense. Refers to recorded income.
Types of economic values
Considering it from a practical point of view, we can say that the objective of the study of economic variables is aimed at giving the product offered the maximum value, which according to what is concluded by the market study, consumers are willing to pay for it. .
Supply-demand relationship: Below we show you the supply-demand relationship scenarios, and their impact on value:
- If the product is positioned in a market where there is high demand for it and little supply, the price of the good will rise, since people will increase the value they are willing to pay to acquire it.
- If the market has low demand and high supply, the value of the product will go down, since there are no people to bid for it.
- If there is an equilibrium between supply and demand, the value of the product is determined by the market price.
Market valuation: It is a referential indicator, where the minimum value with which a market with certain characteristics welcomes a product or good offered is established. This indicator is influenced by the perspectives and paradigms of people on value, and this is often subject to the action of environmental and cultural elements.
rentabilidad: Evaluates whether the investment required to develop a project can be recovered in an acceptable period of time. In a more direct way, it can be established that this indicator determines whether the cost of production is less than the value of the income due to market positioning. A project that includes higher production costs than those paid as benefits is not considered profitable.
Rate of return: It consists of the evaluation, by means of a geometric mean, of the expected future remuneration around an investment. It is used as a variable for evaluating the profitability of a project.
Gross domestic product: It consists of the sum of the values assigned in the different markets of a country, to a good or service of the same type. It allows evaluating the conditions that influence the variations within the different points of the scope of a nation.
Economic Value Added (EVA): It allows evaluating the wealth generated by the good or service, evaluating the risk factors under which it operates.
How to increase the EVA of a product? The first thing a producer must do is carry out tax planning in order to reduce his burden; In addition to this, it is important to carry out a review of assets, and constantly select those that allow the product to be developed at a lower cost; maintain a superior sales ratio against the expenses generated by the assets.
Importance of economic values
Economics is a science that has solid foundations and pursues the development of profitable systems, therefore in order to carry out a conscious evaluation of economic systems and markets, specialists in the area developed this set of indicators, which offer valuable support. , both in the analysis of the favorable conditions for the positioning of the product, and for the determination of the profitability of an investment.
A strong economy is not a benefit that falls on a particular sector. And despite the fact that many doctrines of thought tend to state that market policies are denatured, and wild, the truth is that they are designed to achieve a higher good. A country with a developed system extends its benefits to the entire population (often indirectly).