Do you believe that your ideas have value beyond the time it took to conceive them?
Do you think that your big idea continues to deliver returns for your client beyond the initial time it took you and your team to develop and execute it?
If you answered YES, then you are in the right place!
The MarComms industry specialises in delivering great ideas to increase clients’ brand equity. Therefore, understanding how to recognize, cost, value and sell your ideas to ensure maximum profit, is an essential part of running any creative business.
Part 1: Intellectual Property – a product of the mind, an intangible asset
In order to value and price your ideas, you must first understand how your ideas translate into valuable assets for your business.
Ideas = Concepts = Product of the mind = Valuable = Saleable commodity
Intellectual property (IP) is a legal term, which refers to creations of the mind for which exclusive rights are recognized. Common types include copyright, trademark, industrial design rights and trade secrets.
Ideas are Intangible Assets
Simply put, an asset is a resource that is controlled by your business from which future benefit or income is expected.
However, unlike a desk or computer, which would be recorded as a ‘fixed’ asset on your balance sheet, you can’t physically touch an idea. Therefore, these non-monetary assets, or products of the mind, are deemed ‘intangible assets’.
Examples of intangible assets include:
Patented technology – Dyson patented pivot steering technology.
Trade secrets – KFC Colonel Sander’s special herbs and spices.
Marketing assets –Trademarks such as the Nike swoosh logo and tagline ‘Just do it’.
Your ideas are invaluable assets that distinguish your business (or your clients’ business) from competitors, making products and services unique and attractive to clients.
“Most brands have clients, but brands with energy have followers. After all, a brand, regardless of its balance sheet value, is only ever worth some-thing if consumers want to buy it . . . and buy it again.” – John Gerzema
Ideas are separate from the time and direct costs incurred whilst preparing your strategic proposal, storyboards and other documents that help explain your big idea. They are also separate from the time and costs it will take to produce and execute your concept.
So, the conundrum is: how do you value, set a price and sell intangible assets?
Valuation certainly starts with the number of hours it takes your team to develop a tangible written interpretation and visual communication of the idea. However, ideas are often worth so much more than the basic equation of hours multiplied by charge-out rates.
Learn how to value your ideas as intangible assets in Part 2 of How To Value And Price Your Ideas at www.kathrynsmint.com.au/blog