What does 'Added Value' mean in business terms?

'Added Value' in business terms refers to the enhancement a company gives its product or service before offering it to customers. It is essentially the difference between the selling price of a product and the cost of the materials used to produce it. This concept is crucial because it illustrates how businesses can increase their profits by offering products that provide more value to consumers than the cost of the inputs.

For instance, if a product costs $10 in materials and is sold for $15, the added value is $5, reflecting the extra worth created through labor, branding, design, and customer service. This value can differentiate a product in a competitive market, leading to greater customer satisfaction and loyalty.

Understanding this definition allows businesses to focus on improving their offerings and potentially increasing this added value through enhancements and efficiencies, ultimately leading to increased profitability. The other options, while related to business concepts, do not encapsulate the specific meaning of 'Added Value' as clearly as the correct answer does.