What formula can be used to determine product value based on benefits and cost?

The formula for determining product value based on benefits and cost is derived from the idea that value is essentially a balance between what you receive (benefits) and what you give up (cost). When you subtract cost from benefits, you are essentially measuring the net value that a product provides. A higher value suggests that the benefits significantly outweigh the costs, making the product more attractive to consumers.

This calculation reflects the perception of value: if the benefits of a product exceed the costs incurred to obtain it, then consumers are likely to perceive that product as valuable. Conversely, if the costs exceed the benefits, then the product is likely devalued in the eyes of consumers. This reasoning is foundational in marketing and economic theory when assessing consumer behavior and product desirability.

The other formulations do not accurately represent this relationship. Adding costs and benefits together does not yield a meaningful value calculation, nor does dividing cost by benefits, which would produce a ratio rather than a direct measure of value. Similarly, combining cost with value does not capture the essence of value assessment as it introduces an element (value) without properly defining it within the context of benefits and costs.