Why Do Brands Like Apple or Gucci Command Higher Multiples?
Not all revenue is created equal. Some brands command attention—and premium valuation multiples. But why?
Here’s what sets them apart
Emotional Buying – Unlike utilities or commodities, consumers choose Gucci or Apple for how they feel, not just function.
Role of Brand – For luxury or lifestyle categories, 70–80% of purchase decisions are brand-driven.
Perceived Value – These brands don't compete on price—they create desirability.
Customer Loyalty – High affinity → recurring purchases → stronger cash flow stability.
Valuation Impact:
1.Higher Role-of-Brand Multiplier in Profit-Based Models
2.Enhanced pricing power → stronger profit margins
3.Premium justifiable in DCF and Market Multiples methods
4.Lower brand risk → lower discount rates → higher value
Reminder: Strong brands reduce volatility—but overreliance without continuous innovation is risky (ask Nokia).
Are premium multiples always justified? Or is brand just another bubble waiting to burst? Share your take
Absolutely. We have IBBI-Registered Valuers under all three categories—Land & Building, Plant & Machinery, and Securities/Financial Assets. Our team also includes experienced chartered accountants and engineers.
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