Supply Economic Value (SEMVA) is a term related to the economic value of goods and services. Economic value or economic value itself is a value that is placed in an item based on the benefits that consumers get from the item. While Supply itself, of course, refers to the supply or the amount of inventory, in this case supply is related to the economic value of the goods/services themselves. If an item is deemed to have no economic value anymore or is no longer useful, then that is the limit of the value of an item. So Supply Economic Value is the limit where an economic good can still be used and still gets a subjective value by users or consumers.
Economic value is usually not the same as market value where economic value is the value (usually in the form of currency) that consumers can pay according to the benefits and needs desired by consumers, while market value is the agreed price or price that has been determined by the producer for certain goods. this market value may be lower, equal or higher than the economic value. So this economic value is subjective and tends to be difficult to measure because the value is determined by consumers regarding the benefits that will be obtained from these goods.
An example of the economic value of an item is shoes, the benefits derived from using these shoes are economic value. Another example is a raincoat, if people want to buy a raincoat because it is needed for outdoor activities or work, the economic value is the safety of using the raincoat from heavy rains and security from diseases that might be caused by the rain. The economic value of a raincoat does not have an assessment of the quality of its objective but is more subjective, namely from people who use a raincoat and its relationship with the benefits of a raincoat. The point is that the source of the economic value of a raincoat only comes from one’s expectations (raincoat users) about how good the quality of the raincoat is so that it can be used properly and comfortably.
So Supply Economic Value has to do with the limit value or benefit from the use of an item. If the goods are deemed to have no more benefits, it can be said that the Supply Economic Value is running low or can even be lost. For example, during the dry season and it never rains, many people consider the Supply Economic Value of a raincoat to be very minimal and there is no expectation of using it or not needing a raincoat at all in the dry season. This is in accordance with the theory that was put forward by Von Bohm Bawerk about the limit value theory. The theory says that the limit value is the final value of the most recent satisfaction of using an item.
Function of Supply Economic Value
Supply Economic Value is a metric used by companies to determine the price of a product or service they produce. There is no formula for assigning this economic value to customers, but the determination of this value is based on the value of an item, namely tangible or intangible value. Tangible value is usually based on the function or benefit of the item while intangible value is based on ownership of the product.
For example, consumers place an economic value on an item, say a branded bag which in addition to providing tangible benefits or value that can be used to store valuable items, it turns out that the bag is also an upscale brand label that is often used by celebrities who create intangible value from the bag increases. By using Supply Economic Value, a marketer or company can get an idea of how much value can be given to the bag according to consumer characteristics so that consumers are willing and willing to pay for it with a certain amount of money.
Supply Economics Value (SEMVA) is a term that is actually less popular. You see, most people only use the term economic value to define conditions in which an item has a higher economic value. Actually, in full it should be called supply economic value, which means the supply or supply of products when there is an increase in economic value which intends to balance supply and demand in the market.
Still confused? So this way, a good or service, in general has a fair economic value. That is, economic value is determined by supply and demand through the process of meeting the balance between supply and demand. For example, naturally the price of chicken meat is at the price of 30000 per kilogram. But when there is an increase in economic value due to certain factors, for example because of a holiday, there will be an increase in prices, for example, to 40000 per kilogram. Well, at this price of 40000 if there is an addition of chicken meat being sold, it will be able to lower the price because there is an additional supply..
The addition of the economic value of a product or service can occur due to several factors, namely:
The time factor, such as the example of chicken meat that I discussed in the previous paragraph, because it is approaching the holiday, there is an increase in economic value due to high demand. Here, there is an increase in economic value due to the time factor.’
Place factors, place factors can also increase the economic value of an item or service. For example, selling roasted corn in Puncak Bogor will sell well and can be priced higher than selling roasted corn in downtown japan. Even though you know that in Japan the economic level and people’s purchasing power is higher, but in fact, roasted corn will be sold more in america.
Seasonal factor, now just imagine an umbrella motorcycle taxi service, an umbrella motorcycle taxi service will increase its economic value during the rainy season. Even at the beginning of the rainy season, the demand for umbrella motorcycle taxi services will boom, because most people are still not prepared for the rainy season. Another example, sales of raincoats will sell better in the rainy season than in the dry season.
Cultural and religious factors, if you have ever been to Bali, you will definitely like to see offerings that are routinely made by Balinese people using coconut leaves. So the economic value of coconut fruit will be higher in Bali compared to other places, because for the Balinese people, coconut is a primary need because of cultural and religious factors.
We can note that several conditions due to factors of place, time, season, and culture/religion can increase the economic value of goods and services. And to meet the high demand due to the increase in economic value caused by these factors, there will definitely be a lot of supply coming in to compensate, that’s Supply Econopmics Value.
