Every brand is unique. Every brand valuation therefore requires a similarly bespoke approach or brand valuation method. Calculating value is by its very nature subjective, whether business value, property value or brand value. A robust brand valuation aims to eliminate as much subjectivity as possible. This objectivity is achieved by using established, accepted brand valuation methodologies, industry benchmarks and market comparables.
Calculating brand value is similar to valuing business and other asset classes. There are three main ways of calculating brand value:
- Economic income approach: where a brand is valued using one or more valuation methods that convert anticipated economic benefits into a present single amount, for example the relief-from-royalty brand valuation model using discounted cash flow (DCF) analysis.
- Market comparable approach: where a brand is valued using one or more valuation methods by comparison with similar assets which have been sold, for example using P/E ratios or turnover multiples.
- Cost approach: where a brand is valued using the sum of the individual costs or values of the brand assets and liabilities, for example the cost of building or recreating the brand.
The economic income approach is generally the primary brand valuation approach. Within this there are a number of brand valuation models and methodologies used to value brands. The market comparable and cost approaches to valuing brands are generally used to support the income approach. The economic approach uses market benchmarks and data which also make it commercially relevant. To find out more about specific brand valuation methods, click here.
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