Dictionary of Procurement Terms

A fair return on investment.

1. Feature or benefit added to an existing good or service that increases its usefulness or worth to the buyer or end user. 2. The increased worth of a good or service as it progresses through production and distribution.

A critical and systematic assessment of the functions of a good or service to ensure the cost of the good or service is no greater than is necessary to perform the functions of that good or service and meet standards, specifications, procedures, and practices. See also: Value Engineering.

An organized, systematic approach to providing the necessary functions in a project at the lowest possible cost by substituting methods and materials with less costly alternatives without negatively affecting functionality. See also: Value Analysis.

A fixed-price contract with a provision for rewarding the supplier for faster delivery or superior performance.

A statement used by a company to differentiate its overall offerings in the marketplace to increase the attractiveness of its goods and services by highlighting and explaining features, benefits, or innovations.

A company that adds a feature or service to an existing good or service bought from another source and resells it as an integrated good or improved service.

A tax based on the value added during each stage of a product’s production or distribution. Common throughout the European Union.

A business strategy that sets a product or service price based on the benefit it provides the customer, rather than on the cost of the product, market price, competitor, or historical price. Value-based pricing includes advertising or surveying to determine or measure the anticipated benefit the customer will receive and align the value delivered. Pricing is based on the perceived or actual value that the end user will receive.

An insurance policy in which the sum to be paid in case of loss is fixed by the terms of the policy; especially relating to fire insurance.