How do you measure brand value?
Short Answer
Brand value is most commonly measured using the Relief from Royalty method, which estimates what the business would pay to licence its brand if it didn't own it, discounted to present value.
Full Explanation
There are three main approaches to measuring brand value. The Relief from Royalty method calculates the present value of royalty payments the company avoids by owning its brand — using royalty rates from comparable licensing agreements (typically 1-8% of revenue depending on the industry). The Price Premium method measures the additional revenue generated because customers pay more for a branded product versus a generic equivalent. The Demand Driver approach attributes a portion of total enterprise earnings to the brand based on its role in customer purchase decisions. For financial reporting purposes under IFRS 3 and ASC 805, the RFR method is most commonly accepted by auditors because it relies on observable market data. Opagio's valuator applies the RFR method with industry-specific royalty rate benchmarks to produce defensible brand valuations that can be used in M&A, fundraising, and balance sheet reporting.
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