The key measure of value for your business will be how much profit this software will generate. The classic methods are:

-- To generate a discounted cash flow for the profits this software will generate. This typically takes the form of the following type of calculation:

(selling price - selling cost)x(licenses sold) - support costs

for the next 5 years with the rate of this cash flow discounted by something like 10% each year.

-- To identify what your revenues will be in the next several years and multiply this by the same factor that is being used for other companies in your industry that have recently been sold, or are publicly traded. Some of the links on this site will give you this type of information.

There have been several other posts on this site that discussed various aspects of software product and software business valuation that you might find interesting to look at. Among these are:

http://www.softwareceo.com/forums/showthread.php?t=907
http://www.softwareceo.com/forums/showthread.php?t=853

There is also a good white paper on the SoftwareCEO industry white papers page entitled "Every Software Company Owner Wants to Know: How Much Is My Company Worth?" located at:

http://www.softwareceo.com/white_pa...tsMyCoWorth.pdf

Your cost of development does not directly impact your business valuation. The revenue (and therefore profit) generated is the key driver for valuation.

A patent can have a significant impact on the valuation, depending upon what claims (if any) you are granted. This will take several years to determine. You are doing the right thing to apply for a patent, but the valuation of the patent ultimately depends on:

a) Whether the patent can be used to generate licensing revenues and/or

b) Whether the patent will make it more costly for others to solve the same customer problem that your software solves

This should help give an overview of how to approach valuation of your business. Feel free to write back if you need a more specific response regarding some aspect related to your business.

There is also a valuation paper on my website.