There are different methods for data valuation, depending on the purpose and context. Through the vast experience gained, Data Valuation Partners have developed proprietary valuation models which deliver robust, defensible valuations for a vast range of sectors and scenarios.
Some commonly used methods are:
- Market value: the data value is based on the market driven price that it can fetch, such as through data sales, licensing or exchange. It requires data to be standardised, comparable, and tradable, which is not always the case.
- Income approach: the data value is based on the income or cash flow that it can generate, such as through cost savings, revenue enhancement or risk reduction. This method requires data to be linked to specific business outcomes and metrics, which can be challenging to measure and attribute.
- Cost approach: the value of data based on the cost of creating, acquiring or maintaining it. This method requires data to be accounted for as an asset or expense, which can vary across different accounting standards and practices.
- Hybrid approach: combines two or more of the above methods to account for the different aspects and dimensions of data value. This method requires data to be evaluated from multiple perspectives and scenarios, increasing the complexity and uncertainty of the valuation.
The methods listed have their limitations and only one gives a defensible valuation like that provided by the unique methodologies used by Data Valuation Partners. Data valuation is not a simple or straightforward task. It requires a lot of data, domain, and business knowledge, analytical and critical thinking skills.
If you want to understand the value held in your business, then please contact us.