It is generally said that brand valuation is the process used to calculate the value of a brand or the amount of money another party is prepared to pay for it.
Dragon Law Firm’s legal services for brand valuation?
Typical brand valuation method?
There are many methods to evaluate the brand. In specific case, the company can apply different valuation methods for its brand. It is based on the ability to increase product value (can sell higher than usual); the level of brand influences to purchasing decisions by customers; the cost to build successful brands; the values related to buying and selling on the stock market; the ability to make a profit of the brand.
1. Price of Selling a Brand
When customers feel secure, confident in the quality and prestige of a brand that they are willing to pay a higher price than normal. That ability and the real brand value will bring the higher brand valuation. We can measure this method through customer research. Customers will be asked a lot of questions to assess the differences between similar products with branded and non-branded.
2. Ability to Sell a Brand
Ability to easily sell based on the customer's preference is also another brand evaluation. The brand value is calculated depending on the difference of market share instead of profit. This method is based on the statistics relating to the current strength of the brand without considering many factors to the future.
3. Cost for Building Brand
Based on the actual costs that company has had to spend on brand development to the current situation such as market research, advertising, media ... Investment costs completely proportional to the added value of the brand so this approach is completely incorrect. This calculation is usually used by brand experts as quick mental arithmetic way to the value of a brand.
4. Share Price on Stock Market
That is the difference between the total market value of the company, calculated on the share price, minus the whole value of the company's books. This value is relative because stock prices can change every day, but the true value of the brand depends heavily on business strategy, marketing and the ability to implement that strategy.
On the other hand, the fixed assets shown in the books of accounts is calculated based on the purchase price, minus the annual depreciation. This value may be higher than the actual remaining value of the asset on the market (due to the innovation of technology, machinery and equipment). In contrast, the value of assets such as land, goodwill is sometimes lower than the market valuation.
5. Ability to Make Profit
Based on the current revenue or profit of the enterprise, brand valuation experts will calculate the average flow to brand value.
Some necessary tasks for brand valuation:
1. The managers must have a correct perception of brand valuation, building brand strategies in line with the business activities.
2. Coordinating with enterprises inside and outside the industry to exchange information and experience in brand valuation; Inheriting the research of other departments such as marketing, R&D, finance to be able to use the brand valuation; Performing a complete financial reports monthly, transparent accounting for the brand valuation.
3. Increase the reputation of the company on the stock market. When disclosing information, enterprises should make specific reports on brand value to provide more information about the intangible assets such as market segment, analysis of marketing activities, assessment of the brand value, trademarks, forecasts about the company future).
4. Continuously update the brand valuation techniques, bases and conditions of company for brand valuation.
For more support on brand valuation and brand sale and purchase, kindly contact to Dragon Law to be consulted:
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