Tiffany’s “Everyday Objects” and its brand value
*This article was first published in Nov 2019.
The jewellery brand Tiffany has a line of products euphemistically called “Everyday Objects”, which includes a sterling silver paperclip ($165) and an assortment of Lego bricks ($1,650) amongst other things. The question of “who would buy them?” aside, this is potentially a good opportunity to elucidate the value of Tiffany brand.
Brand value is that elusive part of corporate accounting which is largely determined by FOMO and whatever the latest buzzwords flying around at the time of evaluation.
It is partly why a phone with a half-eaten apple logo costs considerably more than another phone with very similar, if not superior functionalities. To put it simply, the brand value is how much consumers are willing to pay in excess of an alternative product.
Value of a phone + value of Apple brand = value of an iPhone
These Tiffany products provide an excellent case study because it is easy to work out the value of similar products. And the difference between the price of a Tiffany paperclip and a regular paperclip must be the value of the Tiffany brand. One other thing is the value of sterling silver itself. It is an expensive material. And it will need to be incorporated into the equation. Luckily, silver is a commonly traded asset and its price is very well documented.
Sources:
Tiffany “Everyday Objects” — https://www.tiffany.com/home-designs/shop/everyday-objects/
Case 1 — paperclips
Paper Clip Bookmark: $165 (Tiffany)
Regular paperclip: $0.44 (Office Depot)
Let’s break this down. Perfectly ordinary paperclips can be purchased from Office Depot at $4.39 for a pack of ten. That will put the price of one regular paperclip at $0.44 a piece. Sterling silver is traded at $0.57 as of writing. The amount of silver required to form a similar-sized paperclip should be about 1 gram. Therefore, an ordinary paperclip made of pure silver should be valued at around $0.44 + $0.57 = $1.01.
Since the Tiffany branded silver paperclip is retailed at $165, the difference of $163.99 should be coming from the value that the market places in the Tiffany’s brand value.
Sources:
https://www.officedepot.com/a/products/308478/Office-Depot-Brand-Paper-Clips-No/
https://www.moneymetals.com/precious-metals-charts/silver-price
Case 2 — Tin of tomatoes
Sterling Silver Tin Can: $1,025 (Tiffany)
Del Monte Diced Tomatoes: $2.50 (Walmart)
A perfectly fine Del Monte tinned tomatoes (14.5oz) can be purchased at $2.50 from Walmart. Field-grown tomatoes were retailed at $2.17 per pound in 2018. Using a calculator like this one, I can easily convert oz to pound. In order to get 14.5 oz of tomatoes that go into the tin, you would need roughly 0.91 pound of tomatoes, which is worth about $2.17.
$2.50 — $2.17 = $0.53 is the value of a regular tin minus the tomatoes.
I happened to have access to a kitchen scale and an empty tin of a similar tomato product at hand. And it weighed 45g. We know the density of tin is 7,280 kg/ cubic m and that of silver is 10,490 kg/ cubic m. We can apply the ratio of 7280/ 10490 to work out roughly how much a can with the same volume would weigh if it was made of silver. Tiffany’s sterling silver tin should weigh about 64.8 gram, which puts the value of the silver required to manufacture such a can at $36.96.
Retail price of the Tiffany can ($1,025) — the cost ($37.49) = Tiffany brand value ($987.51).
Sources:
https://www.walmart.com/ip/Del-Monte-Diced-Tomatoes-14-5-Oz/10295137
https://www.statista.com/statistics/236907/retail-price-of-tomatoes-in-the-united-states/
Case 3 — Lego bricks
Sterling Silver Building Blocks: $1,650 (Tiffany)
Equivalent Lego bricks: $0.60 (Lego)
Sterling Silver Building Blocks is essentially a set of 10 Lego bricks. The closest equivalent products are sold at $0.14 (BRICK 2x2), $0.17 (BRICK 2x3) and $0.29 (BRICK 2x6). If you were to buy the same number of these pieces individually, you would be paying $2.09 for the whole ten-piece kit. Thanks to the people of the internet, we know the measurement of these Lego pieces. From there, it is easy to calculate the cubic volume for each. The ten pieces of Lego blocks will have the total volume of 18.09 cubic cm. We also know 1 cubic cm of silver weighs 10.49 gram. This puts the value of silver required to make these Lego parts at a hefty $79.31.
$2.09 (original Lego pieces) + $79.31 (silver) = $81.4 is the value of raw material. And the remaining $1,568.60 is the value of Tiffany brand in this case.
Sources:
http://www.bartneck.de/2019/04/21/lego-brick-dimensions-and-measurements/
https://www.aqua-calc.com/calculate/volume-to-weight/substance/silver
Case 4 — Yarn
Sterling Silver Ball of Yarn: $9,270 (Tiffany)
Average knitting yarn: $4.34 (Amazon)
Looking at the top 5 products in the “Best Seller” section of Amazon, an average knitting yarn can be anything from $2.94 to $6.44. The average of five product listings was $4.34. Having no prior knowledge of knitting or access to an average-sized yarn, I had to use my imagination to estimate the size of such item. I shouldn’t think a knitting yarn would be any larger than 10cm x 10cm x 10cm. And looking at the product image, I bet it’s more than half empty inside. Otherwise, it would be one heavy paperweight. I would estimate the volume of silver required to make this piece to be 1,000 cubic cm x 0.4 = 400 cubic cm. And most likely, this is still overestimating how much material is required. This will give us $4.34 (average-sized knitting yarn) + $2,391.72 (estimated value of silver required) = $2,396.06 as the theoretical value of an unbranded silver yarn. Remaining $6,873.94 must be the value of Tiffany brand in this case.
Sources:
Summary — Tiffany’s brand value
From a paperclip ($165) to Lego bricks ($1,568.60), Tiffany “Everyday Objects” line includes products of a wide range of price points. But if you focus on the proportion in relation to the final retail price, the value attributed to Tiffany brand sits in a close range of between 95% and 99%.
So, here is the answer. Tiffany’s brand is worth $163.99 in the case of a paperclip, $987.51 for a silver can and $1,568.60 for an assortment of Lego pieces. But the elusive “brand value” is over 95% in all of these cases.
