Calculating Your Brand's Worth

A quick way to obtain a rough estimate of your brand's worth is to use an abridged version of the Royalty Relief method. Ask two senior officers within your organization to assist you, giving each of them one half of the assignment, but don't tell either of them what the other one is working on. That way, you're much more likely to get an unbiased answer.
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Assign one officer to imagine your company exactly as it is but without any brand attributes. The staff remains, as do the facilities, the systems, the products and services, etc. The customers are still there as well as the sales effort. But gone are the company name, the logo, the advertising, the public relations and internal and external communications of any kind. And, of course, the officer should calculate the corresponding effect this absence of communication would have on your firm's reputation and visibility in the marketplace. Now ask this officer to place a value – a real dollar amount – on getting all that back. What would your company have to pay? What would you be willing to pay?
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The second officer should work the inverse of the equation. He or she should imagine the company exactly as it is with all brand attributes intact. Now,

say a new competitor enters the marketplace with no brand of its own. The interloper makes an offer to buy or license your firm's brand. What amount of money would you accept to cede your name, your identity and your reputation to a competitor?
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It's human nature to place a lower value on things we have to buy, and a higher one of things we want to sell. So the first officer's calculations will probably produce a lower number than the one arrived at by the second officer, even though they're both evaluating the exact same thing. So these two numbers represent the range within which your brand's value will fall.
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Of course, the devil is always in the details. There's much more to the Royalty Relief method than the above simple experiment will reveal. And, in actual licensing of trademarks, the method can undervalue the brand, depending on the terms of the license. But the above is a useful exercise in calculating an approximate value. And from that, you can determine whether you are devoting enough resources to the care and feeding of your brand. Contact us for a more in-depth discussion.