Relief from Royalty Method

Definition

An income-based valuation technique that estimates the value of an intangible asset by calculating the royalties the owner avoids paying by owning the asset rather than licensing it. The method requires selection of an appropriate royalty rate — derived from comparable licences, royalty rate databases, or industry benchmarks — which is applied to projected revenues to generate a royalty income stream that is then discounted to present value. The relief-from-royalty method is most widely applied to trademarks, patents, and technology assets.