The cost of building a brand
- 1 hour ago
- 8 min read
Is the cost of developing a brand worth it?
I say this a lot, think of every brand you know and buy from, they achieved that goal by developing a brand to have you as a customer. So why is your business any different? Why is developing a brand not a priority for your business just as much a sales team is, or overheads to keep your lights on?
Many small businesses go into business thinking, “I have a great product or service and there will be someone out there willing to buy it if I just put it out there”. Yeah, maybe if you’re the only dentist, real estate agent, or airline operating in your town or city, or the only tech business that does what you do, or the only FMCG product of its kind on the shelf.
The reality is, we’re in a global market of competition and brands now stand as the conduit between your company and customers. And the cost of building a better brand over time is far less than the value it will deliver to help you achieve better business success.
Price vs. Cost
Now if you’re reading this as a business owner considering this thing called ‘branding’, you might be thinking “I need a logo and some colours”. Or you might be a bit more cluey to know what the true scope of branding is when it comes to developing a strategy and identity that shapes the foundation of your brand, giving you the tools to go out and market it, and win. If not, then perhaps that might have broadened your horizons and you can learn about it more in this article I've also written about my process of developing the foundations for a brand.
The price of a logo or better yet, a better developed brand strategy and identity (that includes a logo), will vary depending on who you choose to work with. If you work with me, it’s typically $15,000. And you either think that’s incredibly cheap, or you’ve just spat out your coffee. Other people will be cheaper, and others will be pricier, but it all comes down to these factors that I’ve noted before in my content.
So depending on these price multipliers on top of the cost to do business as a branding services provider, this will determine the price you’ll be met with. But I don’t want to dwell on the price of branding because that’s not the focus of this article. Because the price you pay to help you develop the foundation of a brand is usually a one time fee and over time it will turn into an appreciating asset that is in stark contrast to a depreciating one like a new Mercedes or BMW ‘company car’. In other words, there’s a return on investment.
Branding is an investment
Investment is the word I’d rather focus on than price, for this part at least, because that’s what it is. Buying insurance for your business isn’t an investment, buying a company car isn’t an investment, leasing an office space isn’t an investment. However these are the investments that will appreciate in value to your business:
A great team
Intellectual property
Customer relationships
Business partnerships
Systems & Distribution networks
And a brand
Five out of those six in that list have to do with people and that says something about what matters in your business. But more importantly, what can connect each of them is a clear strategy and identity that directs the ship and brings the right people aboard, be it your team, your network and your customers.
Branding, brand building and marketing, all work best when they are invested in. Because an investment isn’t a short term payoff, otherwise that would just be a cost of doing business like your overheads. Instead, if you and your team put proper effort into utilising your branding, following your strategy, and applying it to your marketing, that investment of not just money, but time and effort, all pay off over time when you’ve built:
Awareness
Strong Positioning: what you’re known for
Confidence
Reasons, times and places for buying
Availability when/where customers need your offer
Consistent experiences that delight and solve problems
Community and/or an ecosystem that breeds or aligns with culture
I could rattle off a longer list but the point is that these amount to why we buy into some brands over others. And if I join that point with the cost of not building a brand, what will that cost your business if you don’t?
The costs of building a brand over time
Typically the average spend is on building a brand, nuturing it and marketing it is around 5–10% of your annual turnover for branding/marketing spend.
So what you need to do is first factor in the potential outlay needed to deploy this branding that is first developed and the costs associated with marketing your business with advertising, content, etc, so that your brand is actually able to reach and connect with your target market.
‘Costs’ aside, this effort over time requires proper effort too. As many businesses lump this stuff on the office receptionist that amounts to a few posts on Facebook and Instagram when they have time.
Those who succeed take this stuff seriously and put in the proper time and effort to gain traction in their market, especially away from the shelf their product is found, or their shop, or their website. Which is why dedicated teams are hired to focus on brand management and marketing to help achieve growth, as much as a sales team will. What we’re also seeing is the rise of fractional marketing teams that are contracted out to help with the heavy lifting of day-to-day planning and execution to maintain a consistent presence AND find growth opportunities as the capacity for doing more expands.
So brand building is definitely not set and forget. The branding bit at the start is usually a one time thing, apart from resisting your strategy cyclically. But be conscious that a brand doesn’t just act on it’s own either. It needs people to drive it and depending on how much you have to play with, will depend on how much you can realistically do. So if you’re expecting champagne on a non-alcholic beer budget, we need to either bump up that budget or reassess those expectations if you want to compete with those around you who are also thinking and do the same as you to win.
What is the ROI of branding?
So if you can see branding as a long term investment, amazing. It takes guts, big belief + time, effort and money to see the long term payoff, but it’s why so many businesses succeed beyond having a great or unique offer. That said, it’s still not to say that there isn’t a short-term pay off to measure an early ROI.
For example, if you’re a real estate agent, and a new vendor comes in your door because your brand gave them the confidence to come into your office before they’ve even met you, instead of one of the other five agencies on the same street. Is that worth it to you? It might be if your 2% commission on a $1M property sale is $40,000 and your branding ‘cost’ you $15,000.
So as I asked at the start of this article, is the cost of developing a brand worth it? In most, if not all cases, yes. Right?
What is the value of a brand?
At the end of the day, any good strategy to see your brand win and to see your business succeed, comes down to a simple question of, “Is it profitable?”. Because if your brand is not creating profit, your business can’t grow and you won’t be able to do all the things that go beyond ROI and profit to allow your brand to develop more value. But what is that value?
The thing about branding services specifically is often that there’s intangible value that proves hard to quantify, especially when doling out a branding services proposal and being asked, “But what do I get at the end?”. And the answer to that question might sound like you’re not getting bang for buck and a bunch of wishful thinking.
In tangible terms you get a piece of paper that outlines your strategy and what you need to tactically do and achieve, along with your messaging written down for you to use and repeat, and visual assets like a logo, colours, fonts, and maybe a mascot and some sounds.
The less tangible answer is that you’ve been given a direction to aim at. The requirements to hire a great team and develop a meaningful culture. A mandate of who to target and bring in as customers. And a clear picture of how your brand needs to show up in the market. That’s your branding. Add in the product/service, price, placement and promotion, aka. your Marketing plan for your brand, and that’s what you get at the end.
But if I really sold it to you, what you get at the end are the tools you need to be recognised, remembered, thought of, sought after, found easily and preferred over competitors. Not just for customers either, but for people who want to work in your team and partner with you.
That’s the value of developing a brand.
But more specifically, the value of a brand as ‘marketing guru’ Seth Godin has said, “The value of a brand is how much I’m paying for it above the substitute. And if I’m not paying extra, then you don’t have a brand”. Think about it, market leaders in any category aren’t the businesses offering the cheapest products or services are they?
I want to buy an EV, but is my decision based on cost or brand?
Given what’s going on in the world at the moment and it causing a hefty increase in the cost of fuel, my wife and I have started to really consider buying an EV, especially when we’re planning on building an all electric house powered by solar, it makes perfect sense.
3 years ago I would have been pretty sold on a Tesla or settled on a known brand like Kia, and not even remotely considered these relatively new Chinese brands like BYD, Geely, GAC or Jaecoo. On one hand the long established brands like Kia, Mazda and Subaru would definitely be my first preference because there is earned trust and past experience having owned these car brands in the past.
But if I look at the cost of these lesser known Chinese EVs and compare them to the more known brands, their features and benefits start to look more appealing. That said, do I want to take a gamble with a brand I’m not familiar with? For most buyers, the answer is usually no.
My point here is that as a newcomer to the market, you need to build strong associations quickly to gain the trust and confidence that warms up a buyer. Give them every reason to believe you are a good brand to choose, if not the best option in the market for a specific buyer.
Which is why brands like Geely are partnered under the same umbrella as Volvo, Lotus and Polestar to create reassurance. It’s why BYD makes a big point of being the second largest battery manufacturer for EV cars in the world and also makes home batteries that creates a whole brand ecosystem. It’s why MG offers a 10-year warranty built on top of a legacy brand name. And it’s why Jaecoo made a J5 EV SUV specifically targeted at young families and those with pets that travel with them…You can tell I’ve done my research, hey? But by doing this you’re developing a more compelling brand that people can buy into, rather than just a cheap car with cool bells and whistles. And you can bet that Jaguar will do just that when they re-enter the market as a luxury-class EV brand. They’ll create brand value well and truly above the substitute.
So developing a strong brand gives you every reason to see greater profit from this intangible value you have created, because it gives buyers more reason to choose you over others in their mind, which is of value to them.
One last important thing to mention is that as branding and marketing people we’re not creating a brand for you. We’re developing the foundations and tools for you to go out and build your brand over time through every customer experience. You are the custodian of your brand that creates that value. Because like I said at the start of this, the businesses who utilise their brand best are the ones you know and buy from. So give your brand a shot with better branding for better business success.
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