# Marginal Value Concept

# Concept

**Marginal Value **relates to how much of something we have.

Generally speaking the **Marginal Value** for an item decreases as the quantity of items that we have increases.

# Examples

## Cookie

For example suppose you are starving and someone gives you one cookie. That cookie has immense **Marginal Value** to you.

Now suppose they give `1`

more. That one also has a great deal of **Marginal Value** but not as much as the first one, because you are somewhat satisfied.

Now suppose they give you `1000`

more cookies. You eat `100`

and can’t eat any more. The remaining cookies have zero **Marginal Value** to you.

**Service Parts**

We sell high precision Robotic Gears with purchase cost **$400,000** and sales price **$700,000**.

We expect to sell `7`

of these, plus or minus `4`

annually.

Suppose on average we always carry `10`

units. The average inventory level is `10`

units.

We end up only selling `3`

each year. The remaining `7`

units that we carried had zero **Marginal Value**.

They only added **Marginal Cost**, because the `cost of capital`

for these items is high.

Generally speaking there is a decrease in **Marginal Value** for each additional Robotic gear that we choose to carry.

# Related Concepts, Formulas, and Guides

## Service Parts Profit Optimization

For more concepts, guides, and formulas related to **Service Parts Profit Optimization** visit the** Firefly Semantics Service Parts Profit** Optimization Help Center: