However, I always considered shipping costs as part of the goods value. I
thought "I paid 220 for this guitar, even though 20 are for shipping, so to
me it's worth 220" (I know this is wrong, because shipping doesn't add
value to the goods).
"Shipping cost" has added to the value of goods for thousands of years.
Transporting of goods from where they are of little value (low cost per
unit) because they are common there to another location where they are
of high value (high cost per unit) because scarce there is the reason
humans engaged in "trade". Goes back to the prehistoric when that might
be a basket pack of cowrie shells some guy put on his back and walked
hundreds of miles from the coast to the interior. He did this because
this effort changed (increased) the value of the cowrie shells in that
basket.
THAT is why my example of this was firewood. The value of "stumpage" is
quite low (price per cord of non-lumber wood where is/as is in the
forest). Maybe just $5-10/cord. That value is being increased by the
firewood dealer felling, skidding logs to the landing, trucking to
his/her yard, bucking, splitting, and put to dry. Might then be able to
sell it for $200/cord delivered short distance and maybe plus a
surcharge for longer distance. Similarly the person buying this wood
might be paying extra to take those piles of wood dumped at his/her
place and stack it under cover << it IS worth more stacked in the
woodshed rather than buried in the snow >>
Work performed on goods and transport of goods does affect the value of
goods.
Suppose you were a maker of wooden widgets. Do you imagine the proper
"cost per widget" in your inventory would be just the cost of the wood
(and you could take as immediate expenses the cost of labor to transform
the wood into widgets) or that you were required to make those costs
part of the cost of widgets in inventory (so you got to deduct those
expenses only as widgets were sold as "cost of goods sold". The taxman
is going to have a say about this. BTW, this has a HUGE affect on how
certain businesses are conducted << it is "costly" for producers to hold
inventory long tern when they can't deduct production costs till sold >>
Michael D Novack
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