The idea of developing and improving new work systems for new generations are commonly involve with technology as a component under the knowledge base as well as existing experience in creating technological innovations in the form of digital at the level of modern applications or platforms in order to create a new service, a new product, new work process and prepare to launch for business in the future which is related to intellectual property or IP valuation.
In this case, the property valuation in the conceptual process layer which is in the process of being invented and developed is required to conduct a comparative study between the current market and changes in market status in terms of innovation utilization in business. The important variables are target customers, market competitors, market shares etc. The question of how many advantages will there be for each factor? Mostly, the new inventions and innovations are more likely to have advantages than the original basic ones which when completed, may be in the form of a tangible or intangible asset. For your information, these factors can be appraised using the ‘Income Method’ by projecting the discounted cash flow to be further and you will be able to find the value of the following technological innovation which will be very useful for those who needs funds to develop technological innovations into their business in which those who are interested will have the references from the licensed valuers with the reliable professional standards.
In the end, the valuation using the income approach from the idea of the innovation’s owner by projecting Discounted Cash Flow, it will be possible to find the value in such innovative technology with more effectiveness. This will be beneficial for start up firms who need funding to develop innovations for businesses through preparation of business plan in order to attract interested investment parties.
Software Valuation
Why the need to appraise software program value?
- Accounting reasons – When an organization invests into the research & development purpose for a certain program with a large amount of money. This investment is recorded as the company’s expenses. However, after an independent valuer appraises the value, it can be registered as an asset, which is more useful and effective in terms of the company’s overall performance.
- Company’s asset: Represents the status of the enterprise for use in trading or negotiation in mergers and acquisitions, especially start-up businesses.
The software license program in a business organization can be defined by 2 business user groups. First is the ‘End User’ who utilized the program and second is the business groups who develop the program. These are the factors that should be considered:
- The license of the program that has been bought as the company’s ownership. A license price must exist in the market so that it can be used for comparison. The factors to be taken into consideration are the remaining time of utilization as well as the opportunity that the version will be upgraded for determining the utilization lifetime.
- The self-developed program contains a development history from the start until the present is considered from the costs of program development in the past compared to the one in the present. However, there are many types of applications that have emerged in these modern days that are replaceable. Therefore, the ‘Market Approach’ as the valuation method is important to be considered.
- For those organizations that develop the program, release, or service as a platform. For this case, the software valuation will consider:
First, program development costs, history since the start until the present, see the program components as modules in which the cost of program development can be calculated as ‘Man-day’.
Next, the program’s potential to generate income is divided into two main groups: selling rights consist of implementation fee, modification fee, and annual maintenance fee. On the other hand, those programs that are platforms for rent will have to pay attention to the number of users on that platform and the membership fee compared to market competitors. The other incomes can be advertising expenses etc.
As for the platforms under development or a conceptual model that has not been released yet can also be released. However, kindly note that it will be a technology valuation or innovation under the assumption.
