Ever wondered why some brands seem to dominate the market, even if their products aren’t better than the competition’s?

It all comes down to brand value—your secret weapon that can elevate your company’s worth, catapult your market position, and create long-term success.

How Do You Measure Brand Value?

So, what’s the magic formula for figuring out what your brand is worth? Great question. There are a few ways companies and experts do it:

1. Income Approach (a.k.a. The Royalty Method)
   
   Imagine if your brand was so valuable that others would pay to use it. This method estimates your brand's value based on how much a company could earn in royalties if they licensed it out instead of using it themselves. It’s all about future earnings—looking at how much money the brand is likely to pull in down the road and putting a number on it.
   
   Think of Disney. Disney earns royalties from licensing characters, franchises, theme parks, resorts, not to mention its content and streaming platform Disney +.
   
   
   
   

2. Market Approach (Comparative Shopping for Brands)
   
   Just like you price shop before making a big purchase, this method looks at what similar brands or companies have sold for recently. By checking out those benchmarks, you get a pretty good idea of what your brand is worth in the market. For example a guy called James Freeman started his little coffee roaster in his tiny back yard shed in 2002. His idea was to sell single origin beans that were no more than 48 hours old to companies who felt Starbucks and Dunkin’ Donuts were a bit lacking. He called his coffee “Blue Bottle”, and 15 years later his company and brand was bought by Nestle for $700 million. This acquisition set a powerful precedent for the value of an iconic coffee brand in much the same way that recent home sales establish the precedent for the value of a house.
   
   
   
   
   

3. Cost Approach (What Did It Take to Build the Brand?)
   Sometimes, brand value is measured by looking at the costs of creating the brand in the first place—marketing expenses, ad campaigns, customer engagement efforts, you name it. Think of it as the price tag for building up brand awareness from scratch. This method of brand valuation is the usually the default method if none of the other options apply. It’s also a great way to justify investing in elevating your company’s brand through a brand transformation process where every aspect of your revenue, marketing and customer model is taken into account and optimized.
   
   
   
   

4. Brand Equity Analysis (What Do Your Customers Say?)
   As we well know as entrepreneurs, numbers don’t tell the whole story. This method goes a bit deeper by measuring the love customers have for the brand. Surveys, loyalty metrics, and brand recognition help put a value on how much extra oomph your brand gives beyond just the product itself.

Why Bother Building a Brand Anyway?

Now you might be thinking, “Is all this brand-building really worth the effort?” Short answer: Absolutely. Here’s why:

Allows You to Charge Premium Prices: Want to keep out of the commodity mindset and price war game? Want to keep your margins high? A great brand does just that. It reduces price sensitivity because customers believe the brand is worth it.

Boosts Your Market Share: A strong brand doesn’t just get noticed; it commands attention. It can actually give you a bigger piece of the pie because customers will often choose your brand over the competition—even when others offer something similar.

Fosters Customer Loyalty: We all know that feeling when we stick with a brand because we trust it (even when others might be cheaper). Building that trust keeps customers coming back, no matter what.

Makes Expansion Easier: When your brand has a solid reputation, you can launch new products or jump into new markets without starting from scratch. The trust and love your brand already has will carry over to new offerings.

Adds Real Financial Value: Investors love a strong brand because it’s not just about current earnings—it’s about future potential. A recognizable brand often leads to higher stock prices and a stronger position in the market.

How Much Is a Brand Worth When a Company Sells?

Here’s where the rubber meets the road. When a company is up for sale, its brand value isn’t just an add-on—it’s a game-changer. In some cases, the brand alone can be worth more than all the physical assets combined. Think about it: a well-loved, well-recognized brand can make up 50% (or even more) of the company’s total value when it’s sold. For some iconic brands, that percentage climbs even higher.

So, when you invest in building a brand, you’re not just creating a logo or running some ads. You’re building a powerful asset that can significantly increase your company’s worth and help you stand out in a crowded market. And when the time comes to sell, that brand could be the thing that makes all the difference.

Building a brand isn’t just about looking good—it’s about crafting a legacy that adds real value and gets people talking.

Ready to elevate your brand into a powerhouse?

The time to start is now. Click here to get started!