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Fintech’s Three Areas Of Branding Cost Investments

We have been approached recently by various Fintech startups and companies willing to rebrand / refresh their image due to the ongoing creation of new fintech services companies. The game is clear, there is a growing amount of startups who are already unicorns. To clear the competition, differentiation is the key to success and with it comes a brand development strategy. As costs are a strong decisional factor, we wanted to show the breakdown of how it illustrates in the branding world. This description below from Diverge Branding website illustrates the major areas of investments encountered and the why’s of the costs.

Three Areas Of Branding Cost Investments

It is important to account for all of the potential costs in the development of your branding initiative budget. Although the cost for a brand consultant is one of the principal expenses, it’s certainly not the only cost. A comprehensive branding budget should consider the costs in three different areas of expenditure:

Brand Development is a “soft cost investment”, primarily attributed to outside professional assistance. However it can also include the internal costs of resources to manage and participate in the development process.

Transformation is a “hard cost investment” that will pay for the transition from what the brand is to what it will be. With corporate brands, these costs cover all the items that reflect the brand. This includes everything from business cards, building signage, employee manuals, web sites and numerous other applications. However, foor a product brand, it is the packaging that will require the greatest attention. Retail brands are the most complex. Changes to a retail site could affect signage, architecture, interior design, uniforms, and many other elements spread across a retail network.

Launch is a “promotional cost investment” associated with signaling brand change and building awareness. This typically includes advertising, PR, events, and other go-to-market initiatives.


Getting The Right Help

The principal outside costs of a branding project are the services of a professional branding consultant. Someone with the expertise and experience in branding will be invaluable in making sure you get the results you seek. An experienced consultant will guide you through the process and help you make informed and objective business decisions. The project scope and the caliber of the professional services you engage will drive the cost for these services.

Branding is a collaborative process. It is not something that you would want to hand off to someone else without your active involvement.

The scope of a brand development project will vary by the type of branding problem and range of applications the brand will be applied to. Interestingly, cost is not necessarily correlated to the size of the company. A small or medium size company could require the same extent of work as a much larger corporation.

How Do I Estimate What To Spend On Brand Development? 

Of course there is always more than one way to create a budget. However, guessing is not one. For a real-world reference point, ask another company who has gone through a similar type of project. Referencing something that has been done in the past is a good benchmark, but no two projects are the same. Sooner or later you’ll need to “roll-up-your-sleeves”.

A Quick Budgeting Formula For Brand Development

Before taking the time to dive into the details of calculating a branding budget you might want to just get a rough idea of what it could be.  A good way to get to an order of magnitude budget is is apply what we call an IBI (Initial Brand Investment) formula. It’s a quick and easy way to get to approximate a budget with a limited amount of information.

IBI = AGR (Annual Gross Revenue) x PSF (Professional Services Factor – %) amortized across EBL (Expected BrandLife – Years).

  1. First, you simply need to know the AGR (Annual Gross Revenue) of your company.
  2. Then, apply the PSF (Professional Services Factor). That factor ranges from 2% to .5% depending on the AGR number (see table below). The smaller the revenue number, the larger the %. The results of the calculation (AGR x PSF) will yield a baseline estimated cost for professional services. That is the IBI (Initial Brand Investment). That baseline number can then be used to adjust upwards or downwards depending on the breadth and depth of the scope. Keep in mind, the PSF does not include transformation hard costs. 
  3. To amortize your investment, divide the IBI (Initial Brand Investment) by the expected brand lifespan (in years).  Brand lifespan is based on the projected amount of time before any significant adjustment is needed to the brand. The average lifespan of a typical brand is about 10 years before an adjustment might be warranted. That means the cost of the IBI can be amortized over that 10 year period.
  4. At the same time, we assume that the brand value will increase somewhere between 5% and 10% based on historical multi-industry trends. An actual brand value calculation is complicated and requires data that may not be available so,  for our purposes, we assume that it will be at least more than revenue. It is a simple way to compare the increase in value against the IBI.
Annual Gross Revenue (Agr)   Professional Services Factor (Psf)   Initial Brand Investment (Ibi)
$1MM to $5MM  x 2%  = $20K to $100K
$6MM to $25MM  x 1.5%  = $90K to $375K
$26MM to $75MM  x 1%  = $260K to $750K
$76MM to $125MM  x 0.75%  = $570K to $937K
$126MM to $200MM+  x 0.5%  = $630K to $1MM


The IBI for a Fintech company that has a gross annual revenue of $25 million dollars would be 1.5% of $25,000,000 = $375,000. The amortization over 10 years would be $37,500/yr or $3125/month. At the same time, the brand value (for the purposes of this example, we’ll use gross revenue) is expected to increase at a conservative rate of 5% equal to roughly $26,250,000. Therefore, the $375,000 Initial Brand Investment has conservatively increased the brand value by $1,250,000. Note this does not take into account any increases in revenue that should be appreciated by investing in the brand. That would be about a 30% return on investment over the 10 year period.

How does the brand cost investment compare to the other costs of marketing?

According to the Small Business Administration2 the average marketing and advertising spend should be around 7% to 8%. For our example above, that is around $1,750,000. A one time brand investment of $312,000 would be just 18% of a typical annual marketing spend.

Where Does All That Money Go?

In our example above, how is that money used? In a typical branding project a fairly common % allocation by phase would be:

Discovery 10% $37,500
Formation 20% $75,000
Expression 35% $131,250
Transformation 20% $75,000
Launch 15% $56,250


Remember this is a starting point of reference only. Your budget may be significantly less or a little more. Working with a branding professional will help you get to a budget that you can afford while being sufficient to achieve your objectives.

Budgeting By Phases

A better way to arrive at a budget, that is a more accurate reflection of the work, is to look at the project by Phases. Although it is still going to be an estimate, it will be based on a higher level of detail than through the formula approach above. Consider how to build a branding budget with detail closer to reality.

Link to the original post from divergebranding’s blog.

This can be an overwhelming process to get you started in the branding or re-branding process of your company or startup. Getting the right partners that understands your business and industry is crucial to pull your brand successfully.

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