Considerations

• Intangible property includes any type of property that does not have a physical presence, and obtains most of its value from invention and intellect. For example, computer software, patents, trademarks, copyrights, compositions, contracts, systems, forecasts, mailing lists, and research and development are all intangible property, according to the IRS.
  
  

Fair Value

• Businesses that own intangible assets can create a valuation based on the estimated length of time they will use the asset and the annual cash flow it generates, according to WIPO International. For example, a shipping business that generates $1 million a year in sales through its mailing list and anticipates customer loyalty for at least five years can value its mailing list at $5 million.
  
  

Potential

• Not all types of property are as easy to value as a mailing list. For example, a company may own a patent for a revolutionary and theoretical type of wireless Internet connection, or forecasts that may generate future profits if they come true. In this case, a buyer and a seller must determine a price based on the potential that a piece of intangible property retains little or nothing, as well as the chance that the asset will skyrocket in value.
  
  

Comparisons

• Individuals and businesses can use comparisons to existing goods on the market when valuing intangible assets. A domain name owner can use the prices of similar domains in his niche to determine the value of his portfolio, and a recording studio can determine the value of a copyrighted composition by comparing the composition to similar pieces with a proven track record of sales.
  
  

Timeframe

• Copyrights and patents expire in the United States, an occurrence that can negatively impact their value. For example, a pharmaceutical company that invents a blockbuster medication has a monopoly on the production of it for an average of 11 years, according to the Food and Drug Administration. After this point, rival companies can manufacture a generic form of the medication that will cut into the existing pharmaceutical manufacturer’s customer base and profit margins. A commercialized intangible asset will always have more value if a business can monopolize its production and distribution.