The Replacement Cost Valuation Method is one of the cost methods used to determine the value of an intellectual property. Under this method, the valuation analyst estimates the cost of developing intellectual property with the same functionality or utility as the original intellectual property based on prevailing prices. The components of cost considered under the replacement cost valuation method are direct costs, indirect costs, intellectual property developer’s profit and an opportunity cost/entrepreneurial incentive to incentivise the development of the intellectual property.