Brand valuation is which tells us the approximate value of a brand. Actually, brand valuation is the process of which is used for the calculation of the value of a brand. Brand valuation involves two major parts in it. Historically or traditionally, the valuation of a company or a brand was calculated in terms of tangible assets like property land, machinery, stock etc. Apart from the historical part, brand valuation also involves the intangible assets like the brand name. In recent times, the overall brand value is calculated based on both tangible as well as intangible assets. 

Key Requirements of Brand Valuation Process:

For the conduction of the process of brand valuation, there are some of the key requirements which helps in the smooth and correct conduction of the overall process that is as listed below. 
•    Transparency of the process is of immense importance for the most appropriate result.
•    Next comes the validity of the process which is quite essential in this regard.
•    The reliability of the brand valuation process should be addressed properly.
•    Sufficiency is another key requirement for the smooth conduction of the process of brand valuation.
•    The objectivity of the process needs to be clearly defined in order to get the accurate result.
•    Ultimately, the financial, legal and the behavioral parameters need to be properly analyzed so that brand value is correctly calculated

Brand Valuation Methodologies:

There are three main methodologies for brand valuation used by different companies which are as enumerated below:

The Cost Approach:

As can be understood from the name of the method, it is based on a calculation of the overall cost. Here the brand valuation is calculated on the basis of the overall cost of the tangible assets minus the cost of depreciation. 

The Market Approach:

This approach is based on the estimation of the values of the market transactions of the compatible brands. If the asset undervaluation is unique, then the comparison is carried out in terms of utility, property and technological specialty. The data is calculated on similar or comparable transactions might be analyzed from the following sources. 

•    The annual reports of the company
•    The specialized rate of royalty databases and publications
•    Decisions concerning damage or depreciation
 

The Income Approach:

In the income approach method, the brand valuation is calculated by referring to the present value of the economic benefits over the remaining of the brand’s useful life. There is a total of six different methods of this income approach of calculating brand value. 

• Price premium method – Here the value is estimated by the price premium generated by the brand by comparing to a similar unbranded service or product.
• Volume premium method – In this method, the brand value is estimated by the volume premium generated by the brand by comparing to a similar unbranded service or product.
• Income split method – In this method of valuation, the current value portion of the economic profits being caused to the brand over the remaining useful life. 
• Multi-period excess earnings method – Here the valuation is done for each of the intangible assets for the purpose of calculation of the cost of capital of each.
• Incremental cash flow method – Here the extra flow of cash is identified in a brand when compared to an unbranded business of a similar type. 
• Royalty relief method – In this method, it is theoretically assumed the company does not own the brand which it is operating. This method makes use of similar data available for similar arrangements in the industry and then assigns the value to the brand as the current value of future royalty payments.