Pricing of an access solution

Abstract

This project aims at valuation of an intellectual property of a company. The company will be called as ABC henceforth to maintain the confidentiality. The project will first focus on understanding the current framework used in pricing the solution. Based on the understanding of current methodologies new method of pricing the solution will be suggested. ABC uses cost based approach in pricing the IP. Different methods of IP valuation from research papers where analyzed. Based on the analysis Monte Carlo Simulation with DCF was chosen to account for uncertainties and also to account for future benefits that might accrue from the IP. Using Monte Carlo simulation the risk factor for the current scenario was determined. Scenario analysis was done by varying the input parameters depending on market analysis. Different combinations of license fee and Royalty where calculated for the different scenarios. The results are summarized in section 9.Based on the analysis it s recommended that ABC follows Monte Carlo analysis with DCF for IP Valuation. This method not only takes care of uncertainty factors but also help us in creating different scenarios. It also takes into account benefits that might accrue from the IP. This will help in a competitive and scenario based pricing of the IP. ABC can also follow either Component based Model or ODM model depending on the Customers Market base. Value based pricing could also another way of pricing the IP. Due to time constraints this method is out of scope of this project.