IP Valuation Calculator - Intellectual Property Valuation Calculator & Patent Value Calculator
Free IP valuation calculator & intellectual property valuation calculator. Calculate patent, trademark, copyright, trade secret, and software IP values using professional cost, market, and income approaches including relief from royalty method. Our calculator is used by IP lawyers and innovators for licensing negotiations, portfolio management, and strategic IP decisions.
Last updated: October 21, 2025
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Presets typical valuation parameters
Total R&D and creation costs
Economic life or legal term
Revenue from IP-protected product/service
Industry standard royalty rate
Revenue forecast period
Risk-adjusted rate (12-20% typical)
Value of similar IP in recent transactions
IP Valuation Calculator Types & Methods
Typical value range
$100K - $10M+
Technology patents valued primarily on revenue impact and competitive advantage
Royalty rate typical
0.5% - 5%
Brand value based on recognition, customer loyalty, and market position
Royalty rate typical
5% - 15%
Books, music, software, and creative content valued on licensing potential
Approach emphasis
60% Income method
Confidential information valued on competitive advantage and cost savings
Calculation method
NPV of royalty stream
Values IP by calculating present value of hypothetical royalty savings
Typical royalty
5% - 10%
Technology IP valued with consideration for rapid obsolescence
Quick Example Result
For a patent with $2M revenue, 5% royalty, 15-year life:
Income Approach
$1.18M
Fair Market Value
$1.05M
How Our IP Valuation Calculator Works
Our IP valuation calculator uses three professionally-recognized valuation approaches to determine fair market value. The cost approach calculates replacement cost, the market approach uses comparable transactions, and the income approach (relief from royalty method) values future economic benefits. Results are combined using weighted averages optimized for each IP type.
IP Valuation Formulas
Weights are automatically adjusted based on IP type. Patents emphasize income approach (60%), trademarks favor market comparables (40%), and trade secrets rely heavily on income (60%) due to limited market data. The calculator assumes 3% annual revenue growth and applies risk-adjusted discount rates.
Shows three valuation approaches with weighted combination to fair market value
Understanding the Relief From Royalty Method
The relief from royalty method is the most widely accepted income approach for IP valuation. It calculates the present value of royalty payments the IP owner avoids by owning rather than licensing the IP. This method requires: (1) projected revenues attributable to the IP, (2) market royalty rate for similar IP, (3) projection period (typically IP's remaining economic life), and (4) discount rate reflecting IP risk. The sum of discounted annual royalty savings represents the IP's fair market value.
- Cost approach best for newly developed IP with limited revenue history
- Market approach requires comparable transactions in similar IP
- Income approach most reliable for established IP with measurable revenue
- Discount rates typically 12-25% depending on IP risk and maturity
- Royalty rates vary by industry and IP type (2-15% typical)
- Weighted valuation provides balanced, defensible fair market value
Sources & References
- American Society of Appraisers (ASA) - Business Valuation Standards (BVS-VII)Professional standards for intangible asset and IP valuation
- Licensing Executives Society (LES) - Royalty rate databases and benchmarkingIndustry-standard royalty rates by IP type and technology sector
- AICPA Practice Aid - Assets Acquired in a Business CombinationAccounting guidance on IP valuation for financial reporting (ASC 805)
Need help with other IP calculations? Check out our contract cost calculator for IP licensing agreements and litigation cost estimator for IP disputes.
Get Custom IP CalculatorIP Valuation Calculator Examples
Patent Details:
- IP type: Utility Patent
- Development cost: $500,000
- Annual revenue: $2,000,000
- Royalty rate: 5%
- Projection period: 10 years
- Discount rate: 15%
- Remaining life: 15 years
- Market comparable: $1,500,000
Valuation Calculation:
- Cost approach: $500K × 0.85 = $425,000
- Market approach: $1.5M × 1.0 = $1,500,000
- Annual royalty: $2M × 5% = $100,000
- NPV calculation: Σ discounted royalties = $1,181,800
- Income approach value: $1,181,800
- Weighted: ($425K×15%) + ($1.5M×25%) + ($1.18M×60%)
- Fair market value: $1,047,830
- Range: $838K - $1.26M (±20%)
Result: Fair Market Value = $1.05M | Range = $838K - $1.26M
Income approach weighted highest (60%) due to proven revenue stream and patent characteristics.
Trademark Valuation Example
Established brand, $5M revenue, 3% royalty
FMV: $2.1M (market-weighted)
Trade Secret Example
Proprietary formula, $3M cost savings
FMV: $3.8M (income-weighted)
Frequently Asked Questions
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