Current method in determining the value of software is based on the total cost spent in software development. This method suffers from over valuation of software because development inefficiencies and product imperfections are taken into account. This paper proposes new methods based on the notion of Technical Debt to determine the value of software more objectively.

What Is the Value of Your Software?
By: Jelle de Groot (SIG), Ariadi Nugroho (SIG), Thomas Back (Leiden University), and Joost Visser (SIG / Radboud University Nijmegen)
In the proceedings of the Third International Workshop on Managing Technical Debt (MTD 2012), June 5, 2012, Zurich - Switzerland.

Abstract:
Assessment of the economic value of software systems is useful in contexts such as capitalization on the balance sheet and due diligence prior to acquisition. Current accounting practice in determining software value is based on the cost spent in software development. This approach fails to account for the efficiency with which software has been produced or the quality of the product. This paper proposes three alternative models for determining the production value of software, based on the notions of technical debt and interest. We applied the models to 367 proprietary systems developed by a range of different organisations using a range of different programming languages. We present the valuation results and discuss the weaknesses and strengths of the models.

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What Is the Value of Your Software?