With reference to Brand Finance's valuations, the royalty rate is calculated by reference to a 'Brand Strength Index (BSI)' - which is a competitive benchmarking tool that identifies the strength of each brand in question. This rate is then supported by a profit margin analysis of comparable companies. Profit margins have been shown to be directly correlated to the royalty rates that brands are able to command.
The Brand Finance model uses the Royalty Relief methodology
Brand Strength is divided into three equal parts
Brand Investment (25%)
Brand Equity (50%)
Brand Performance (25%)
The Brand Strength Index is specifically relevant to all Brand Ratings contained within our Global Brand Surveys and Top Brand League Tables.