# Value added?



## Smitty37 (May 14, 2015)

We frequently have discussions on here about pricing, pricing formulas, value of work shop time, skill of pen turner etc.  But we seldom speak of value added.  Let me give you an example of what I'm referring to.  

ABC turner, buys an Emperor Pen Kit...orders a set of Toni's Poly Clay blanks and does little more than assemble the pen and then asks $350.00 or more for the completed pen about three times the cost of the components....Yet what value did ABC add?

BCD turner, buys a couple of sticks of acrylic and makes a pen from scratch using only perhaps a refill and nib. Spends many hours doing all the work.  Then sells the pen for $150,00.  Yet BCD clearly added more value than ABC,

My question is this...How much value does a typical turner add to the product?  Specifically when using Kits as most turners appear to be doing.


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## Akula (May 14, 2015)

ABC added little other than basic skills but purchased everything at a premium.

BCD had much less costs, used more skill in actually making the items.

Will they be the same, doubtful just depending on the skill of BCD

XYZ into the equation; blends/casts their own resin, uses advanced tools for a kit-less fountain pen.

Now XYZ has the less cost involved in this situation (not counting time and experience) and should have the highest roi.


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## Brooks803 (May 14, 2015)

Akula said:


> ABC added little other than basic skills but purchased everything at a premium.
> 
> BCD had much less costs, used more skill in actually making the items.
> 
> ...


 
I vote for XYZ :biggrin:


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## maxwell_smart007 (May 14, 2015)

Doesn't matter - perceived value of the final product is all that counts. 

"Value" is what it's worth - if Turner A sells it for more than turner B, then turner A had a more valuable product in his market.  

Added value only comes into play when you're looking at cost/benefit of your own production, in my mind...do I provide a case, or sell it as an add-on...


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## Cmiles1985 (May 14, 2015)

There again, value is merely in the eye of the beholder. I certainly mean no offense to anyone using Toni's blanks, or Toni, but the real markup SHOULD be in Toni's blanks, not the final pen. I highly doubt that LeRoy gets 3x cost by putting little baggies of parts together. However, the folks assembling pens from Toni's blanks must be receiving the prices they command as her blanks never stay in stock anywhere they're sold. On the other hand, XYZ casts his acrylic, turns a section, threads everything, puts a high dollar nib in that's well tuned and gets, say $300. The parts and equipment are a much greater initial investment (or can be), the tooling requires far more skill, yet the crafter is making less "margin" than the "assembler" (ABC). It almost makes you wonder if there is any sense (other than joy) to make kitless pens. 

Pardon my rambling: I'm eating dinner and typing


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## SteveG (May 14, 2015)

The basic answer to your question will likely be all over the chart, because the venue of the sales transaction will heavily influence the price, especially for kit pens. My own venue does not yield high volume, BUT does support a higher than average price point structure. The influence of the penturner's salesmanship will be right in there, having significant effect on whether a sale will even take place. (A high selling price means nothing if there are no sales completed.) So, for example, I will regularly sell a Rhodium Jr. Gent II Rollerball (using a nice blank typically costing $8) for $155, and one of the many Sierra twist styles for $145. I do competent work, with 8 years experience turning and selling pens, following considerable years doing custom furniture work. My venue is a 4 hour weekly time slot at a Kauai Marriott Resort, making "impulse buy" type sales. So the esoteric, custom FP is not something that would sell for me, as I am not at a pen show. I am enticing the unsuspecting tourist who just wanted to go get breakfast poolside, to run back to their room, grab a credit card and acquire ownership of a nice, custom "kit pen" that they had no idea was going to be in their future. I do maintain the same price structure when I do craft fairs, and my products are typically the most expensive grouping of products at those venues. I still make enough in sales to justify doing them, but likely will cut back from 5 to only 2 per year. (I'm gettin" older, ya know!:biggrin


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## Karl_99 (May 14, 2015)

Maybe I am missing something, but I don't see how doing all of the work yourself adds more value than someone who buys a beautiful poly clay blank and matches it up with expensive components.  The final decision on value is determined at the sale.


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## jttheclockman (May 14, 2015)

The seller themselves could add value. If 2 people sold the exact same pen but one seller was more known in the pen selling venues than he has added value. Just as is the name on a pen adds value. Make the same pen and add a highend name or symbol to it and it jumps in value ( perceived value)


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## designer (May 14, 2015)

Value Added = taking a product and doing work of some sort to it and the value of the product has increased due to the work done to it.


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## Smitty37 (May 14, 2015)

I did this as a fun exercise to see if anyone would actually answer the question.....Reread what the OP asks. It asks about a typical turner (while they are not uncommon kitless pen makers are not typical) and specifically about people who use kits.... there was no XYZ turner and ABC & BCD were only given as background information.


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## SteveG (May 14, 2015)

So Smitty...I talked about my experience, giving actual data points with enough info to figure the Value I add to my product. I am probably a "typical turner", but enjoy a favorable venue, selling "kit" type pens. Did I answer your cleverly worded question?


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## Smitty37 (May 14, 2015)

designer said:


> Value Added = taking a product and doing work of some sort to it and the value of the product has increased due to the work done to it.


You at least know what 'value added' means.


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## TonyL (May 16, 2015)

value add comes in the form of time, place and form utility.
Sometimes just having something at a time when someone really wants it is worth than to that buyer than how much traditional work the seller put into it. That is why popcorn cost $9 at a movie theater. That's what I learned in college anyway .


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## Smitty37 (May 16, 2015)

TonyL said:


> value add comes in the form of time, place and form utility.
> Sometimes just having something at a time when someone really wants it is worth than to that buyer than how much traditional work the seller put into it. That is why popcorn cost $9 at a movie theater. That's what I learned in college anyway .


 To add value to something you have to do something to it --- perform some operation.  

Capital gain not value add is what happens if nothing is done to the item.  

A good salesman might convince someone to pay $6.00 for something everyone else sells for $5.00 - the salesman did not add value to the product he just convinced someone that it was worth more than it was really worth.


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## jttheclockman (May 16, 2015)

I think that is more perceived value than capital gain.

You can also devalue something by adding something to it also.

I think you are playing with words. If a person takes a pen and sells it in a highend store could add value to that pen. Or as i said a well known artist selling the same pen can add value. 

But it is your game. Have fun.


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## Smitty37 (May 17, 2015)

jttheclockman said:


> I think that is more perceived value than capital gain.
> 
> You can also devalue something by adding something to it also.
> 
> ...


 No John T. I am not playing with words.  

val·ue add·ed
noun 
1.
the amount by which the value of an article is increased at each stage of its production, exclusive of initial costs.
adjective
1.
(of goods) having features added to a basic line or model for which the buyer is prepared to pay extra.

Notice both definitions refer to doing something to the article.


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## RustySplinters (May 17, 2015)

I believe there is value added in making it a functional piece of art. 

 I have other opinions as well but I will keep them to myself.


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## jttheclockman (May 17, 2015)

Smitty37 said:


> jttheclockman said:
> 
> 
> > I think that is more perceived value than capital gain.
> ...



Well I guess you are going to continue. But here are a couple examples of devaluing. 

Take one of Eagle's blanks. Now you decided to add a celtic knot to it.You added an article but devalued the blank.

You have a baseball signed by Babe Ruth. You now added your name to it. You again added an article but devalued the ball. 


Just because you add more items to said basic item does not increase its value. It increases its price. Take 2 cars. One a volvo and one a Ford. The Ford had more items added to it to bring it up to the price of the Volvo.  Both the same price. The Volvo is more valuable than the Ford because of reliability.   Perceived value. Now if you are saying price equals value than again play with words. 

That is it I am out of here. Not worth the effort. Have a great day.


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## Smitty37 (May 17, 2015)

RustySplinters said:


> I believe there is value added in making it a functional piece of art.
> 
> I have other opinions as well but I will keep them to myself.


The question is not whether there is value added but what is the value added by taking a pen kit and a blank and turning it into a completed functional pen.

Whether a pen made from a kit is a work of art or not is an entirely different question, not the issue here at all.


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## Big (May 17, 2015)

Is there a quiz, I totally hate quizzes when I slept through the class to begin with. Good question though and I am completely guilty.


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## Smitty37 (May 17, 2015)

jttheclockman said:


> Smitty37 said:
> 
> 
> > jttheclockman said:
> ...


John, why do you insist on trying to make up your own definition of something that is clearly defined.  "Value added" as I pointed out above has two definitions one as a noun and one as a adjective.  Neither has anything to do with the comparitive price of two different items.  It has to do with the value of the item before it has operations performed on it versus the value after performing the operations.  Value and price are not the same thing at all, you are the one suggesting that, not me.

Further, no one suggested that everything that can be done to an item adds value.  Further no one has suggested that making a change to an existing item is adding value.  Value added applies to producing an item, not making changes to an existing item.


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## Kragax (May 17, 2015)

I have found in past business ventures the value is the "perceived value", in other words what ever the market will bear.


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## designer (May 17, 2015)

_My question is this...How much value does a typical turner add to the  product?  Specifically when using Kits as most turners appear to be  doing.

_I re-read the question.This is just too easy nowafter thinking about it.  The value added is total cost subtracted from the sale price.  LOL

Sorry but I just could not resist.  Just seemed a simple answer.


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## nativewooder (May 17, 2015)

As usual, answers all over the board.  My idea of the "value added" to the pens I sold depended on how well I turned and finished whatever blank I used with the kit.  And while I was overwhelmed with the "wizardry" involved in the casting of plastics, they seemed to me to be one-way blanks.  So I decided to purchase the best blanks that I could find and still afford to put on my favorite pen kits.  And I was surprised at the number of people in my age group who wanted minimal finishes on a pen with wood because that was what they wanted to feel, while most of the younger shoppers all wanted the bright colors of plastic.  Even retired, with all my equipment given away or sold, I find I still have a LFRB with leftover blanks like amboyna burl, honduran rosewood burl, all the various maple burls, etc.  "Future Gifts"!


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## Smitty37 (May 17, 2015)

designer said:


> _My question is this...How much value does a typical turner add to the  product?  Specifically when using Kits as most turners appear to be  doing.
> 
> _I re-read the question.This is just too easy nowafter thinking about it.  The value added is total cost subtracted from the sale price.  LOL
> 
> Sorry but I just could not resist.  Just seemed a simple answer.


 Not exactly....value added works like this...how much value do you add to a square (or round) piece of wood by cutting it to a specified length?  How much value do you add by drilling a hole through that cut piece of wood?  How much value do you add by coating a brass tube with glue and inserting it in that hole?  The list goes on.  Note that those operations are the same regardless of what you paid (or didn't pay) for the blank.


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## TellicoTurning (May 17, 2015)

This may have nothing to do with Smitty's question, but I believe that we are not selling a pen, or in my case a bowl, peppermill, wood stemmed wine glasses, etc.., but we are selling the artistry in making those items... without the artistry my bowl is just a piece of wood that's been hollowed and shaped, but it's still just a piece of wood.  Same with a pen, it's just a piece of wood or plastic that has a few components in it...


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## wwneko (May 17, 2015)

It seems you want to know the value added for each operation in pen turning.  Obviously itemizing operations that is a waste of time.  As you acknowledged, there is A LOT more that goes into a pen than the pen kit and blank cost and my "value added" which could be considered labor/shop time.  Everything I do adds value or I wouldn't do it.   

My value added for all operations is approximately 30$ for a single tube and 40$ for a double.  In advanced situations where I may be doing a specific finish or something like inlay that your typical turner doesn't do or do well, then there's more value added.  Selecting the right blank for the right kit, value added.  My eye for shaping a blank to match a kit, value added.  Casting your own custom blanks, value added.  Everything that we do is a value added, that may be why you aren't getting specific answers.


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## designer (May 17, 2015)

Thank you Smitty.  I was right then.

Now if you are looking for each cost itemized and very specific, that might be nigh impossible.  How many blanks can I cut on a carbide tipped table saw blade before I have to resharpen it?  Was I cutting Iron Wood or pine during that time?  Am I down waiting for it to be sharpened or do I have the expense of a backup blade to put on?  What is the time to change it?

These questions will go on and on.  In real life, if you have a dedicated saw for blanks, the time to change a blade is added into the overall time for X number of pens and then averaged per pen.  Crap, where did I put that blade wrench this time?

Cost estimating is a whole field that is very specific and will vary by location and personnel doing the exact same work.  The more data you have the more explicit and accurate you can be.  Do you have a time study/lean Mfg expert with a stop watch writing Everything down and timing each step?  If not, it is a guestimate is all.  Enough guesses and you will be more accurate.  But wait!  that person has become more efficient so the cost went down (assuming no raises or benefit increases).

Hard costs like the cost of a blank for a duck call is easier to quantify  than labor is.  Artistic addition to the end product is also in the category of hard to quantify and a personal thought pattern.  The customer also has an idea in their mind as to what the artistic value is.  Who is right?  The artist or the customer?  Nope I am not going there.  Perceptions and ideals are not quantifiable unless you just came up with the latest version of the pet rock.

I think if you took every member here, asked enough questions to answer all possible variables, added everything and then averaged them, you would still be wrong.  Someone making bottle stoppers for friends that are very nice may not be able to put them in a jurered show.  On the other hand, does that person know exactly to the second and penny how much it cost them to make?  Probably not in all reality.  They are not wrong if they are happy with the outcome and the customers are happy.

I guess what I am throwing out is the difference between Subjective and Objective data.  One is quantifiable and one is not.  One can have a price set and the other changes and is variable and therefore cannot have a specific dollar value put on it other than a guess. By guess I mean comparing to local market prices is all.  I know there are a lot of other variables, but that is the only one I am referring to here.  Be gentle with me on this one.


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## Smitty37 (May 17, 2015)

designer said:


> Thank you Smitty.  I was right then.
> 
> Now if you are looking for each cost itemized and very specific, that might be nigh impossible.  How many blanks can I cut on a carbide tipped table saw blade before I have to resharpen it?  Was I cutting Iron Wood or pine during that time?  Am I down waiting for it to be sharpened or do I have the expense of a backup blade to put on?  What is the time to change it?
> 
> ...


The question is not a question of cost, or how long it takes to perform the operation or what tools are used,  it is how much is the value increased by the operation regardless of how you perform the operation.  

It is also not a question of the price the final item brings in the market. There are numerous factors not related to value that have huge impact on prices.  Venue being just one of them.


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## Smitty37 (May 17, 2015)

TellicoTurning said:


> This may have nothing to do with Smitty's question, but I believe that we are not selling a pen, or in my case a bowl, peppermill, wood stemmed wine glasses, etc.., but we are selling the artistry in making those items... without the artistry my bowl is just a piece of wood that's been hollowed and shaped, but it's still just a piece of wood.  Same with a pen, it's just a piece of wood or plastic that has a few components in it...


You are absolutely correct this, while it might be perfectly true, has nothing to do with my question.


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## jttheclockman (May 17, 2015)

Smitty in my eyes you don't get it. I am not making up definitions. You are trying to combine the words cost with value. They are not the same things. No one is going to be right here because it is your definition and you will not see past it so go for it. Every drop of glue used adds value. Every grain of sandpaper used adds value. Every turn of the blade adds value and on and on and how stupid does this sound. So please let me fade away into the night. There is no answer here. :turtle: I assume you got what you wanted a debate.


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## Smitty37 (May 17, 2015)

wwneko said:


> It seems you want to know the value added for each operation in pen turning.  Obviously itemizing operations that is a waste of time.  As you acknowledged, there is A LOT more that goes into a pen than the pen kit and blank cost and my "value added" which could be considered labor/shop time.  Everything I do adds value or I wouldn't do it.
> 
> My value added for all operations is approximately 30$ for a single tube and 40$ for a double.  In advanced situations where I may be doing a specific finish or something like inlay that your typical turner doesn't do or do well, then there's more value added.  Selecting the right blank for the right kit, value added.  My eye for shaping a blank to match a kit, value added.  Casting your own custom blanks, value added.  Everything that we do is a value added, that may be why you aren't getting specific answers.


Labor and shop time are costs...value added is not costs.  Just to take a simple example...gluing a tube into a drilled blank. Whether that takes you 2 minutes or 2 hours the value added does not change -- the cost changes a lot.


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## designer (May 17, 2015)

I agree.  Venue is just one of the variables as is artistic ability and a whole list of others.  No argument there.

Since you eliminated the hard quantifiable numbers of cost, equipment, supplies and other things that can be quantifiable, the rest would fall under the category of variables then the way I am looking at it.  We are back to subjective again.  You eliminated objective.

Since what each of us think is the proper value added is for each individual step changes and is not based on objective facts, it is simply subjective again.

I am having trouble with why the question.  Not knocking you at all, just a bit unsure.  Are you looking for hard numbers for each and every step as far as to what the value increased?

The value of a pen does not increase immediately when you rough the tube up prior to glue up.  It does add to the final value versus not doing it in the long run.  Short term, not really because the tube does not come loose for the customer right away.  If I  understand you correctly, you want to know what the value added is of roughing the tube then.  Is that correct?


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## designer (May 17, 2015)

In industry even raw material is marked up to add value to the end product.  As are coolants, grinding wheels etc.  Costs, but the added margin add value to the end product.


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## Smitty37 (May 17, 2015)

jttheclockman said:


> Smitty in my eyes you don't get it. I am not making up definitions. You are trying to combine the words cost with value. They are not the same things. No one is going to be right here because it is your definition and you will not see past it so go for it. Every drop of glue used adds value. Every grain of sandpaper used adds value. Every turn of the blade adds value and on and on and how stupid does this sound. So please let me fade away into the night. There is no answer here. :turtle: I assume you got what you wanted a debate.


John . I have stated very clearly that what value added is....it is not related to cost. Taking longer to perform the same operation does not represent more added value but it does increase costs.

If costs exceed the value added it might well determine whether or not a maker will continue putting pens together (if he/she is putting them together with profit in mind) but they will not affect the value added.

Also, it is *not* my definition it is the accepted economic definition of "value added" and you refuse to accept it.


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## Smitty37 (May 17, 2015)

designer said:


> In industry even raw material is marked up to add value to the end product.  As are coolants, grinding wheels etc.  Costs, but the added margin add value to the end product.


Value added is an economic term.  If company A can make a widget in half an hour and company B can make the same widget in an hour starting with the same materials both have added the same value.  But not necessarily at the same cost or with the same processes or equipment.


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## designer (May 17, 2015)

Wow.  Now, that is an idealistic and simplistic outlook.  

Yes, but did they add the same value?  Let's assume the end product meets the product requirements.  Not always the same quality, but the same requirements have been met to specification.  

Let's for the sake of discussion that company B (or A you decide if you would rather switch them) had a much prettier and appealing product that just barely met the lower limits of the requirements.  Company A not only met but exceeded the specifications required, but was not quite as aesthetically appealing but still acceptable.  Who has the most value added?  Company B because it is purdy or company A because it lasted and performed better?

At time of purchase the answer might be one and down the road it might be another answer.

Again, you are asking for Objective answers to a Subjective question.  Only a presidential candidate can answer it (we all know their reputations on objectivity).  In real life there is no way to answer it.


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## designer (May 17, 2015)

And yes, this does answer your question in summary form.  Reason?  You determined the value added for each individual step to arrive a the selling price.  

Do me a favor and setup a spreadsheet for each step involved and the costs, labor and the next column with the value added.  Theoretical numbers of course.  I bet it will be a lot easier for all of us to understand that way.


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## Smitty37 (May 17, 2015)

designer said:


> Wow.  Now, that is an idealistic and simplistic outlook.
> 
> Yes, but did they add the same value?  Let's assume the end product meets the product requirements.  Not always the same quality, but the same requirements have been met to specification.
> 
> ...


 Not so.  I gave a specific example and you changed it to get to where you want to go. 

I said that both the starting materials and the end product were the same. If they are even slightly different I could not have made the comparison.  

Most countries in the EU collect a value added tax, which gets passed along with products and finally along to the consumer.  It is a popular consumption (sales) tax because the final consumer does not see it as a separately stated item.


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## designer (May 17, 2015)

No two end products can possibly be the same.  If they are, your test instruments are not finite enough.

You have made subjective and objective statements and the same with your question.  Pick one or the other.

I am so glad I live in the USA and do not live in the EU.  The VAT tax has always been a point of contention across the board because of subjective views that cannot be quantified.

Still waiting for the spreadsheet by the way.


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## Smitty37 (May 17, 2015)

I think if most of our members here were from Europe, where most of the countries in the EU assess a Value Added Tax (VAT) there would have been more awareness as to what Value Added is.  

If I am making two pens from identical kits and blanks and I take one hour to make each but I discover a defect requiring rework in one of the pens.  And I spend 1/3 hour reworking that kit.  I have increased the cost I have not increased the value added.


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## Smitty37 (May 17, 2015)

It has been fun though.....


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## TonyL (May 17, 2015)

_*Smitty's question from the first post:*_


_*"My question is this...How much value does a typical turner add to the product?  Specifically when using Kits as most turners appear to be doing. "*_

I am not sure if this was covered, but do we agree that there is economic value or utility added (cost of materials, labor, marketing, storing, preserving, delivering etc.) ; and then market value (what someone is willing to pay)? They very often do not correlate. Tastes change, there are impulse buys, there's what something may mean to someone's personal collection (I have had baseballs signed by pro ball players and astronauts and used them to play with ).

But - for me at least - to answer your question, I would have to ask if you were talking about economic value (costs and utlity added) or market value...what someone is willing to pay. It looks like you were talking about market value given the two scenarios that you presented  However, the economic or accounting definition was cited.

It's a good subject because for the life of me I don't know anyone would pay (me) $55 for a bolt action kit with 2 inches of turned AA on it. Yet, many cheerfully did. Most were police officers. In fact, some of my BA's were made from mis-turned kits with longer 3/8th tubes. I just shortened the tubed blank to the BA length.


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## Dale Lynch (May 17, 2015)

I'll jump in,I understand value added as what did I contribute to the product.If I just drilled,glued,turned,sanded,polished a purchased resin blank and fit it to purchased  pen components I figure I added about $5.00 per barrel in production value.If I drilled,glued,turned,sanded,applyied a clear finish,and polished a solid wood blank.Then fit it to purchased pen components I figure I added about$10.00 per barrel in production value.If I built a segmented blank then drilled,glued,turned,sanded,finished,and polished the blank before fitting it to purchased pen components then I would increase the value added to $20.00-$40.00 per barrel depending on how elaborate the design.

This is subject from person to person what is your time and skill worth?Me,I'm slow so if I had to spread the value added $ or the lenght of time it takes me to make a pen,I make sweat shop worker $ per hour.


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## duncsuss (May 17, 2015)

Smitty37 said:


> I think if most of our members here were from Europe, where most of the countries in the EU assess a Value Added Tax (VAT) there would have been more awareness as to what Value Added is.



Having lived in 2 European countries that operate VAT systems, I think I know enough about it to state this with certainty: it is not *value* that is being taxed, but* mark-up*.

If I buy blanks at $2 and pen tubes at $0.25, drill them, glue them and then sell them for $10, I pay VAT on the difference ... _irrespective what "value" I added. _(I can apportion the cost of equipment, drill bits, and two dabs of epoxy cement, of course, on my Income Tax return.) 

_*(edit: or more accurately, VAT is assessed on the difference, since it's already been assessed on the price I paid for the items from my suppliers.)*_

Put another way, as far as Her Majesty's Inspector of Revenue is concerned, "sales price minus costs" is the value added.

I believe I add more "value" by using epoxy than somebody who uses CA to glue tubes into drilled blanks. And I add more value by sanding along the barrel with each piece of sandpaper before moving onto the next grit than somebody who skips that step (unless they have some magic way to eliminate the circumferential scratch pattern.)

Actual dollar representation of all the value I add? I have no idea.


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## Smitty37 (May 17, 2015)

TonyL said:


> _*Smitty's question from the first post:*_
> 
> 
> _*"My question is this...How much value does a typical turner add to the product?  Specifically when using Kits as most turners appear to be doing. "*_
> ...


I thought all of my comments including those in the OP make it pretty clear that I was always referring to Economic 'value added' and not market price.


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## TonyL (May 18, 2015)

Your questions was clear; I was confused by the "sells for $150" - my fault. Thanks for the correction.


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## jttheclockman (May 18, 2015)

I see this debate is still going on. Defining the word value seems to be the key. To me Value is a nondescript word or an intangible that has no monetary number attached to it. Every time you make a pen using a pen as the example again, you are including cost or price not value. Someone makes the same pen and adds a segmented blank, he or she did not add value they added cost. Weather a person sand with the grain or uses epoxy instead of CA does not add value, it adds cost. Now you get done making this expensive pen, where is the value???  How much is the value??? It comes with a selling price and to get that price you took all materials, and labor costs to arrive at it. 

To me what I see as "added on value" is again that intangible. Take that pen and give it to the President and he signs some Bill with it. You now added value to it. Same pen nothing added. How much value or what is the number is indeterminable because it will be the person who buys it that determines it for the time being. Sell that pen again in a year and the value will change again.   

Another example. Take that same pen and sell at a craft show now sell it in Tiffany's and it now has "added on value" just because of the name. 

To me that is what I am reading into this. We will have to just agree to disagree.


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## Smitty37 (May 18, 2015)

jttheclockman said:


> I see this debate is still going on. Defining the word value seems to be the key. To me Value is a nondescript word or an intangible that has no monetary number attached to it. Every time you make a pen using a pen as the example again, you are including cost or price not value. Someone makes the same pen and adds a segmented blank, he or she did not add value they added cost. Weather a person sand with the grain or uses epoxy instead of CA does not add value, it adds cost. Now you get done making this expensive pen, where is the value???  How much is the value??? It comes with a selling price and to get that price you took all materials, and labor costs to arrive at it.
> 
> To me what I see as "added on value" is again that intangible. Take that pen and give it to the President and he signs some Bill with it. You now added value to it. Same pen nothing added. How much value or what is the number is indeterminable because it will be the person who buys it that determines it for the time being. Sell that pen again in a year and the value will change again.
> 
> ...


John, I gave you the definition of value added I am asking about.  I am not asking about selling price.  Forget selling the finished pen that involves a lot of things not related to the value added by assembling the pen.  

Think more like this and make it for just part of a completed pen...there is a pen blank of common acrylic sized for common single bbl pens that was purchased for $1.75 and a similarily sized pen tube that was purchased for $1.00.  The parts are worth $2.75.  

Now prepare that blank for use making a pen, drill it, insert the tube, square it, turn it. polish it and finish it - now it is ready to use as a pen bbl.  What is the blank worth?  

If it is now worth $7.75 the value added is $5.00. 

That is not directly related to the market value which depends on many many other and unrelated factors. Venue, advertising, packaging, shipping. service after the sale, and warranty work to name just a few.


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## designer (May 18, 2015)

This seems to not be at all what the first question was.  The original sentence does not at all sound like this example you put forth.  Maybe in your eyes it is the same, but to me, it is completely different.

Even  though it is an obtuse way of looking at it, it is still only  subjective.  Since you are only looking at the blank, remove the tube  and then tell me what the blank is worth then.  You cannot empirically  add and remove items from the analysis.

Based on your method, perhaps instead, you would like to know what the tube is now valued instead of the blank.  The value of the tube went up $6.75 now.  After all, you left it in the equation for the value and ignored it in the value addition of the blank.  Why not reverse it then and look at the tube value now?

The  tube is the tube.  The blank is the blank.  The tube glued into the  blank that is now finished is an assembly that is now finished and ready  for use.  It has been changed from it's original state of just an acrylic blank.

This would be a good discussion for a logic's or economics class paper.  Realistically they will end up with the same outcome, but the train of thought would probably be different.

Well, I have stirred the pot enough.


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## jttheclockman (May 18, 2015)

Then I will go back o my original statement again. You are combining the word value and cost or price. All 3 are the one and same and this exercise makes no sense. I wish I could have said it was fun but it actually was a way to pass time. I must move on.


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## Carl Fisher (May 18, 2015)

Smitty37 said:


> jttheclockman said:
> 
> 
> > I see this debate is still going on. Defining the word value seems to be the key. To me Value is a nondescript word or an intangible that has no monetary number attached to it. Every time you make a pen using a pen as the example again, you are including cost or price not value. Someone makes the same pen and adds a segmented blank, he or she did not add value they added cost. Weather a person sand with the grain or uses epoxy instead of CA does not add value, it adds cost. Now you get done making this expensive pen, where is the value???  How much is the value??? It comes with a selling price and to get that price you took all materials, and labor costs to arrive at it.
> ...



I don't believe this can be answered.  My time may be worth more or less than your time and it's not up to you to assign that dollar amount. Your jump from parts = $2.75 to $7.75 is a completely made up number.

At best we can apply a formula based on what your feel your time is worth. 

If my time is worth $40/hour (picking a round number for this example) and it takes me 1 hour to mark, cut, drill, paint, glue, square, turn, sand, buff, assemble then the value is $42.75 without any further adjustment.

If it only takes me 30 minutes, then the value is $22.75.  

So given that relatively simplistic example, what is it you're actually fishing for as this is pretty basic parts plus labor cost.


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## Smitty37 (May 18, 2015)

designer said:


> This seems to not be at all what the first question was.  The original sentence does not at all sound like this example you put forth.  Maybe in your eyes it is the same, but to me, it is completely different.
> 
> Even  though it is an obtuse way of looking at it, it is still only  subjective.  Since you are only looking at the blank, remove the tube  and then tell me what the blank is worth then.  You cannot empirically  add and remove items from the analysis.
> 
> ...


 You are right! That is what is done in this case to add value. The tube and blank were combined into a single assembly and finished and the assembly is has a greater value than the sum of the parts. 

The question is how much value do you think a typical pen turner adds by performing that and other operations.  Bearing in mind what I think should be obvious - that that value is measured *before* any of the marketing or selling is performed.

While you seem to consider them tightly linked marketing and manufacturing are totally separate...For instance you might make a pen that you can sell using your normal marketing channels for $250.00 but imagine that you give that pen to me and I sell it through my normal marketing channels stating that you made it.  I might be hard pressed to get $100 for it.  So your marketing and selling and name recognition in your market (in this case) are accounting for $150.00 of your selling price.


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## designer (May 18, 2015)

Again, the value is subjective and everyone will have a different value of the same thing.  I think pretty much everyone agrees with that....no matter how it is phrased or asked.


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## magier412 (May 18, 2015)

I think that the "typical" turner adds a lot to the finished product, regardless of what it is, not in actual product itself perhaps, but more in the enjoyment of making it.

If you are looking for actual value added, I guess I'd have to say that BCD added more specific value - taking "rawer" (is that a word?  well, it is NOW!  LOL) materials and honing them to fit various parts into a whole.

The bottom line of any "pricing" is obviously whatever the market will bear...and that will vary from minute to minute in some cases...as it's often in the eye of the beholder...


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## skiprat (May 18, 2015)

Leroy, one of these days, one of your 'Value' or 'Quality' topic threads is going to bring on Godwins Rule......:biggrin:
But as Eagle was so fond of saying.......WGAS?:wink:


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## Smitty37 (May 18, 2015)

magier412 said:


> I think that the "typical" turner adds a lot to the finished product, regardless of what it is, not in actual product itself perhaps, but more in the enjoyment of making it.
> 
> If you are looking for actual value added, I guess I'd have to say that BCD added more specific value - taking "rawer" (is that a word?  well, it is NOW!  LOL) materials and honing them to fit various parts into a whole.
> 
> The bottom line of any "pricing" is obviously whatever the market will bear...and that will vary from minute to minute in some cases...as it's often in the eye of the beholder...



Pricing is not part of the question.


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## Smitty37 (May 18, 2015)

skiprat said:


> Leroy, one of these days, one of your 'Value' or 'Quality' topic threads is going to bring on Godwins Rule......:biggrin:
> But as Eagle was so fond of saying.......WGAS?:wink:



Nobody  GAS, that's what makes them fun.....


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## Smitty37 (May 18, 2015)

Carl Fisher said:


> Smitty37 said:
> 
> 
> > jttheclockman said:
> ...


 The value is NOT determined by your time or mine.  I might complete the operations in one hour, or I might take two...the item is not worth more because I worked slower one day because I felt lazy or had a head ache because I stayed up too late the night before.  The asking price (if offered for sale) might differ because of differing estimates of the worth of labor, but not the value.


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## Smitty37 (May 18, 2015)

designer said:


> Again, the value is subjective and everyone will have a different value of the same thing.  I think pretty much everyone agrees with that....no matter how it is phrased or asked.


 By your useage Value of anything is always completely subjective. Which while it is accurate enough to say that....try telling that to the Tax Man and give what he thinks is to low a number, in countries with a Value Added Tax


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## TellicoTurning (May 18, 2015)

Smitty37 said:


> TellicoTurning said:
> 
> 
> > This may have nothing to do with Smitty's question, but I believe that we are not selling a pen, or in my case a bowl, peppermill, wood stemmed wine glasses, etc.., but we are selling the artistry in making those items... without the artistry my bowl is just a piece of wood that's been hollowed and shaped, but it's still just a piece of wood.  Same with a pen, it's just a piece of wood or plastic that has a few components in it...
> ...



In retrospect, this is the perfect answer to your question.  In taking ordinary components, a pen blank, a pen kit, (regardless of the cost of either) and adding the artistry in making them into a pen that has now be made more desirable than the components, you have added value to the items.  How much value added can and will depend on the level of the artistry applied and the level that the desirability has been raised to.


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## Smitty37 (May 18, 2015)

TellicoTurning said:


> Smitty37 said:
> 
> 
> > TellicoTurning said:
> ...


  A pen turner might make their own special blanks and if they do the value added would indeed reflect that.  That is about the only way a turner can claim artistry making a pen from a kit.  A Blank with say a Celtic Knot might have a value several times the value of the inputs.  But - the value added is not determined by the selling price.  The item might never be sold.


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## Arbetlam (May 18, 2015)

Don't forget not everyone can do what we do. We as turners have the ability to see in a piece of wood what other people can't. We have the skill ( at different levels) to make what we see come to life. I believe we can say we are artists. But with all art the person who has the say on the value is the beholder.


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## designer (May 18, 2015)

Go to your library and pick up a macroeconomics book.  Your questions will be answered.  Your question has been answered from many different directions here.   Maybe reading from a text book will be easier to understand than our explanations so you understand the concept better.  Not just one small aspect of the whole thing.


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## magier412 (May 18, 2015)

I suspect that the purpose is not the answer so much as the inner workings of the questioner...    LOL


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## Smitty37 (May 18, 2015)

designer said:


> Go to your library and pick up a macroeconomics book.  Your questions will be answered.  Your question has been answered from many different directions here.   Maybe reading from a text book will be easier to understand than our explanations so you understand the concept better.  Not just one small aspect of the whole thing.


 Kindly do not talk down to me Allen. I don't know what your education is but I have a 4 year BS Degree in Liberal Arts, with 148 semester hours on my transscript and another 12 semester hours in accounting taken just for my own edification. Additionally I have about 520 advanced college level clock hours of education provided by the company I worked for - they considered that I had equivalent of a Masters Degree in Engineering.

I have a pretty good understanding of both macro and micro economics. 

I don't think one penturner doing the operations required to change parts found in a pen kit into a finished pen one pen at a time qualifies as a macroeconomic question.  Maybe you could explain that to me withing the definition of macroeconomics.

Just as a note of interest I was an Advisory Test Engineer/manager at IBM as my career job...which is pretty close to what your job title says you are.


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## Smitty37 (May 18, 2015)

magier412 said:


> I suspect that the purpose is not the answer so much as the inner workings of the questioner...    LOL


 You are absolutely spot on...I occasionally like to ask rhetorical questions just to see what kind of answers I get and to "disagree" with most of them.  It is possible to ask a question on here and get 20 answers -- all of which do not address the question asked.:biggrin::biggrin:


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## Carl Fisher (May 18, 2015)

*never mind... removed my comment as it has no more value than the rest of the topic


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## Smitty37 (May 18, 2015)

Carl Fisher said:


> Well apparently we're all just too dumb to answer your question to your expectations.  So on that note, I'm out to go spend some time in my shop as just a turner with no smarts.


 I never said anyone was "dumb" Carl for all I know you are all members of Mensa International.


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## designer (May 18, 2015)

You win.  You are smarter than me.


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## Smitty37 (May 18, 2015)

in economics keep one thing in mind...
There ain't but 3 things in this world that's worth a solitary dime --- that's old dogs 
and children
and Watermellon wine.


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## Curly (May 18, 2015)

Perhaps before we can answer what a turner does to add value maybe we need to debate what a turner can do to devalue a pen.


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## duncsuss (May 18, 2015)

Smitty37 said:


> Pricing is not part of the question.



I can answer this assertion with a quote from a very wise man ...



Smitty37 said:


> try telling that to the Tax Man and give what he thinks is to low a number, in countries with a Value Added Tax



Believe me, as far as the Tax Man is concerned, pricing is the *only* thing that matters.


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## Smitty37 (May 19, 2015)

Curly said:


> Perhaps before we can answer what a turner does to add value maybe we need to debate what a turner can do to devalue a pen.


Good idea, start a thread.


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## Smitty37 (May 19, 2015)

duncsuss said:


> Smitty37 said:
> 
> 
> > Pricing is not part of the question.
> ...


Oh, have you lived where a VAT is in place?  I don't know of any state in the USA that levies one.

Actually the tax man is interested in the difference between the price and the cost....with the exception of the common consumption tax in the Various states in the USA where you are absolutely correct.  That's why so many people on the internet buy from sellers who live where their states sales tax is not collected.


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## duncsuss (May 19, 2015)

Smitty37 said:


> duncsuss said:
> 
> 
> > Smitty37 said:
> ...



I lived in England and in Norway before moving to USA. Both those countries operate a VAT system.

It's really very simple: the purchaser pays VAT on what they buy -- it is (Price x TaxRate).

The only difference between this and a Sales Tax is that _if you sell on_ what you bought (as part of a larger item, or processed in some fashion), you can reclaim the VAT you paid to your suppliers by deducting it from the VAT you collect from your customer.

In this way, only the final purchaser (the consumer, if you will) actually pays the VAT, everyone else in the supply chain passes the bill along to their customer.


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## Smitty37 (May 19, 2015)

duncsuss said:


> Smitty37 said:
> 
> 
> > duncsuss said:
> ...


 Thank you...I have read that  VAT does not get stated separately to the consumer as sales tax does.


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## TonyL (May 19, 2015)

It doesn't have to be separately stated in all states. It can be separately stated/presented or; it can be buried in the final invoice amount as "Sales Tax Included" (without separate statement).


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## Smitty37 (May 19, 2015)

TonyL said:


> It doesn't have to be separately stated in all states. It can be separately stated/presented or; it can be buried in the final invoice amount as "Sales Tax Included" (without separate statement).


It's had to be separately stated  wherever I've encountered it.  That's in quite a few states but mostly in restaurants where I've never seen it included in menu prices. Bars are usually allowed to include it in the stated price of drinks it's treated there like a gross receipts tax.


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