Measuring the Value of your Brand
Just because you are measuring the value of your brand does not mean you are an egomaniac (or brand-maniac!). Doing so means you are trying to be informed to make better decisions with regards to your branding.
It is possible you are a small business owner, or even a freelance professional, and you may be thinking that measuring the value of your brand is a complicated task. Well, I hope that if you are not already valuing your brand is not because you are fearful of appearing as an egomaniac. You would be not! Get it valued, and you will be an efficient brand manager: here it also applies that saying about measurement and management.
If you bear with me, and are willing to sacrifice accuracy for the sake of simplicity in the calculation, I will detail to you my approach to brand valuation.
- Calculate your profit before tax (PBT). You may need your accountant to provide you with this information.
- Estimate the percentage of sales that is attributable to your brand (Y). You can approach this by analysing the average prices in your sector, or those products or services that fulfil the same needs than yours. Can you see a premium in your average selling price? Do you own a higher than expected market share?
- Determine the loyalty to your brand. You could be using the Average Customer Lifetime (ACL) as a first approach.
- Multiply all three figures to obtain a first estimate of your brand value.
BRAND VALUE = PBT x Y x ACL
Notice this way of calculating the brand value is similar to the customer lifetime value (CLV). Effectively, it is quite similar with the value your customers can generate along their lifetime; the difference lays in the fact the brand value includes the brand power (Y), and considers not only the average customer sales but the total stream of profits the aggregate sales are going to generate. That is, the forward looking profit generation attributable to your brand.