How to Price Your Company
Understand that there is NO magic formula for setting price. Price is calculated with this one rule in mind:
Price is set at what the buyer will pay — it is not derived from any mathematical equation but rather as a psychological perception by the buyer.
If the buyer perceives that the value of business is great, they will pay a higher price. That will be dependent on the buyers needs, strategy, and resources. That is why you should target your selling strategy to those buyers who will perceive your offering at a greater value.
If your business has intrinsic value such as goodwill, established contractual relationships, prime location, or patented technology, you may set a value that equates the cost it would take for the buyer to replicate that value.
For example: if you have patented technology that would cost the buyer $YYY in development, the value of that technology would be priced at $YYY if the technology can be used in the going operations of the business.
If your business has contractual relationships that would take a buyer $ZZZ dollars to develop, the value of those relationships would be worth $ZZZ if those contracts can be transferred to the new buyer.
Setting these values can be tricky. We highly recommend that you use a professional valuation based on:
Asset valuation is less complex than market valuation. You simply price the company based on the replacement or liquidation value of your company assets and equipment.
If you have specialized equipment that is not easily compared in value with other readily available equipment, you might consider a professional valuation based on: