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The venal value of a product is the estimate for the price of a good at a given time and taking into account its valuation in the second-hand market.
In practice, it is generally understood that the venal value is identified with the value attainable in the market for a good sold in the second-hand market.
That is, it is an estimated figure taking into account a series of factors and characteristics that define the product and its status at a given time.
This concept is commonly applicable in many sectors, such as property highlighting the automotive or the sale of industrial machinery.
In these areas the exchange of second-hand goods is constant, so the venal value is present in these transactions.
Determining factors in the calculation of venal value
The venal value depends on certain observable characteristics in the good to be valued:
- Antiquity or life of good.
- Series characteristics of the good (inventory of parts, dimensions, estimated useful life).
- Deterioration regarding its original situation, that is, when it was new. In other words, its state of conservation or maintenance.
- Extra modifications or improvements that may increase its value. It would result in what is known as improved venal value.
- Potential demand in the market for that same good at the time of its study.
Venal Value Example
Venal value is a recurring concept in the insurance sector, as it is constantly used in appraisals of goods such as estate or cars
In cases of deterioration or sinister, the entities insurers They usually take into account the market price of a particular model. When recovering costs for a vehicle, for example, this amount can be calculated following the venal value for the same model.
It is generally understood that, in these cases, the venal value of the damaged car would correspond to the market value calculated for a said model (with its characteristics and age).
The venal value with respect to the origin value
On the other hand, in most cases, the venal value is lower than the initial purchase value when the product is new. This is caused by the existence of use and deterioration, as well as Amortization, of good.
However, there are cases in which, according to the nature of the good, the venal price rises above the price again or origin.
That is, a revaluation is seen as a consequence of the elapsed time or trends in the market. Examples of this are products such as certain types of wine, works of art, philately or antiquarian goods.