Definitions and examples

Joint product:

The products which are simultaneously produced using the same input, in a common process and each product carries considerably high sale value. Also, none of the joint products can be recognized as the major product. The raw material is processed in order to produce more than two products. A separation point called split-off point segregates the identity of the joint products from where they are either processed further or sold as they are.

Suppose that a company is trying to process diesel and derives paraffin from the refinery processing. Here, both are joint products that are created with intent and have their own market value. While the process begins by using unrefined natural crude oil, the same is segregated into different sections to be made into other fuels and products apart from diesel in the process of distillation. Post the split off point, individual processes take care of the production of final joint products like paraffin etc.


Any product that is the incidental result of the process of production is called a by-product. Derived from pre-existing material used to manufacture the main products, a by-product has a lower net realizable value as compared to the sale value of  main product since its occurrence is not a priority but a consequence of the production process. The by-product may be processed further to increase its salable value, or be sold off at scrap value depending on its usage.

Suppose that a company uses sugarcane to produce sugar, then sugar is the main product and molasses used to make paper and alcohol is a by-product of the process. When the process begins to crush sugarcane so as to derive the juice to process, the crushed waste is simply of no value to the sugar mill. Hence, this is sold off to paper mills and alcohol distillery at scrap value without further processing.

Difference between joint product and by-product

The major points of difference between joint product and by-product are given below:

1. Meaning:

A Joint product is one which is manufactured ancillary to the production of the main production, hence the purpose is intentional. However, a by-product is purely an unintentional consequence of the production of the main product.

2. Input:

Joint products are manufactured using raw materials from the first step. By-products arise out of the scrap of a given production process since there is no intention to create a by-product.

3. Further processing:

After the split-off point, the joint products go through their own further processing to be turned into individual final products. By-products are generally end resultants that are not processed further and simply sold off to its concerned industry.

4. Economic value:

All the joint products are priced equally when it comes to their economic value. They also share production costs up to the split-off point, which is called the joint cost, after which individual further processing costs are added to the products. By-products are sold at a lower net realizable value or at scrap value.

5. Production:

A joint product is manufactured consciously and simultaneously along with the main product, whereas the by-product is simply an incidental result of the manufacturing of the main product.

6. Usage:

The joint-products have independent uses of their own in the market or may be used as ancillary counterparts, but the by-products are not contributory to the main product in any manner whatsoever.

Joint product versus by-product – tabular comparison

A tabular comparison of joint product and by-product is given below:

Joint product vs By-product
Raw material Scrap or waste
Further processing
Processed to make an end product Is the end product and needs no future processing
Economic value
Same economic value Lower economic value/scrap value
Consciously As a consequence
Individually important Non-contributory