chapter  8
The Cost-Based Approach
Pages 9

The cost-based approach to brand valuation relies upon estimating the amount it would be necessary to spend on creating and developing a similar brand. This notion of value evokes the "labour theory of value", an old concept dating back to classical economists such as Adam Smith and David Ricardo. This approach can prove useful in certain cases where limited forecasts of financial information are available. The cost-based approach to brand valuation entails analysing this "investment" to assess how much it would cost to reproduce a similar brand at the date of valuation. In practice, there are two types of possible methods under the cost-based approach: the first relies on the actual historical cost of a brand; the second is based on the costs that would have to be incurred to develop a similar brand. The following costs were incurred in the first year to create and launch the brand: Design costs, Marketing costs and Legal costs.