Inference Cost

An expenditure that has already been incurred and cannot be recovered, regardless of future decisions. While sunk costs should not influence forward-looking investment decisions, the accumulated effect of past intangible investments — in R&D, brand building, and organisational development — creates the stock of intangible capital that drives future value.

The total cost of acquiring a new customer, including marketing, sales, and onboarding expenses. Optimising the ratio of customer lifetime value to CAC (LTV:CAC) is a central challenge for growth businesses and a key metric scrutinised by investors.

The return that could have been earned by investing in the next best alternative of comparable risk. Opportunity cost of capital is the foundation for discount rates used in intangible asset valuations and investment decisions, ensuring that capital is allocated to its most productive use.

A branch of computer science focused on creating systems capable of performing tasks that typically require human intelligence, including learning, reasoning, problem-solving, perception, and natural language understanding. As an intangible asset, AI encompasses trained models, proprietary algorithms, curated training datasets, and the institutional knowledge embedded in an organisation's AI capabilities.

The level of revenue at which total costs equal total income, resulting in neither profit nor loss. For growth businesses, understanding break-even informs decisions about pricing, unit economics, and the capital required to reach profitability.

Artificial intelligence systems designed to provide human-interpretable explanations of their decision-making processes and outputs. Explainability is increasingly required by regulators — particularly in financial services, healthcare, and criminal justice — and is a key differentiator for AI products seeking enterprise adoption in regulated industries.

A pricing strategy in which a company sets its selling price by adding a fixed percentage to the cost of production or acquisition. The ability to sustain a high mark-up is often a direct reflection of intangible asset strength — particularly brand equity, product differentiation, and switching costs — and is a key indicator of competitive moat.

The process of breaking text, code, or other sequential data into discrete units (tokens) that serve as the input and output elements for large language models. Tokenisation determines how a model processes language and directly affects inference costs, since API pricing for large language models is typically based on token count.

What is the weighted average cost of capital (WACC)?

WACC is the average cost of all capital sources (debt and equity) a company uses, weighted by their proportions — it is the minimum return the company should generate to satisfy all investors.

How do you value machine learning models in an acquisition?

Machine learning models are valued in acquisitions using the Cost Approach (reproduction cost), Income Approach (incremental cash flows), or Market Approach, considering the model's accuracy, data moat, and remaining useful life.

What valuation methods does Opagio Intangibles support?

Opagio supports seven valuation methods: Relief from Royalty, MPEEM, With-and-Without, Replacement Cost, Cost Approach, Greenfield and Market Approach. You choose the method, and the tool marks a recommended one for each asset type.

How do you value technology assets in a business acquisition?

Technology assets are valued using the Relief from Royalty method (for licensed technology) or the Cost Approach (for proprietary software), considering obsolescence risk, remaining useful life, and competitive differentiation.