There are several ways to calculate how much a brand is worth. Some of them require mathematical manipulation, others require preliminary collection of a large amount of data and conducting financial accounting of the company.
Income method
This is the simplest method of calculating brand value and one of the most accurate. It is also called the business reputation calculation model.
To find out the value of a brand, you need to subtract the following from the total value of the organization:
monetary assets at a given point in time;
all tangible assets;
all intangible assets.
In other words, this method i s band data package suitable if the company is being sold, the value of the organization is known, and the prices of tangible assets are calculated (taking into account depreciation).
Intangible assets are an accounting term. They are assets that are not a thing. They can generate economic benefits and have rights to them. Examples include scientific works, patented inventions, created programs and models.
Cost method
The scientific article "Brand Valuation Methods" published in the journal "International Accounting" recommends calculating the value of a trademark using the cumulative cost method.
To do this, all the costs incurred in developing the brand are summed up:
for marketing research;
to create a brand – design concepts, graphic solutions and other creative products;
for trademark registration;
for promotion and advertising, etc.
The brand value at the time of its creation can also be included in the expenses, but this is an outdated approach. Modern practice suggests taking into account the average price of similar products on the market when determining how much the brand costs.
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Demand Research Methods
Economists recommend conducting demand research in the open market. This means that the value of a brand is equal to the price consumers offer for it.
The study can be conducted as follows:
An auction at which a brand is sold, where its value is considered to be the sum of the trade mark sold.
Customer survey. This method is not accurate because the test participants answer subjectively, without having any financial basis. The real amount can be found out if the survey participants send their commercial offers.