Replacement cost
Definition
Replacement cost is what it would take in time and money to build the same asset again from nothing, using current tools and knowing in advance what to make. It is the anchor for pricing a product with users but no revenue, and it is an anchor rather than a floor.
Replacement cost is what it would take in time and money to build the same asset again from nothing, using current tools and knowing in advance what to make. That last clause does most of the work, because the rebuild never repeats the wrong turns the original took.
In the $10,000 to $50,000 band, replacement cost is the starting number in almost every conversation, since there is no trailing profit to multiply. It behaves as an anchor rather than a floor. If nobody would choose to commission the build at all, the fact that it cost $30,000 to produce is not an argument, it is a sunk cost. Replacement cost only prices things somebody actually wants built.
Where it bites
In the seller's estimate. Founders price their own learning curve: nine months of evenings, three rewrites, a framework they picked badly and abandoned. A buyer prices a contractor who has seen the finished product and can go straight at it, which is routinely a third of the original effort.
It also bites where the rebuild would be cheaper than the purchase and the seller has not noticed. Any asset priced above what a developer would quote to reproduce it needs distribution, data or a domain doing the extra lifting, and that has to be stated plainly rather than assumed.
Worked example
A mobile app at $18,000 with 12,000 installs and 900 monthly actives, no revenue. A contract developer quoting the same feature set, both platforms, from a working specification lands near $22,000 at market day rates. So the code alone is being transferred below the cost of reproducing it, and the install base comes with it.
That only counts if the code is worth having. A rebuild quote assumes clean, maintainable work, and an app assembled over two years by one person learning as they went may not qualify. Read the repository before you treat $22,000 as real.
Replacement cost gives both sides something concrete to argue about, which is more than most pre-revenue negotiations start with. Sellers should get an actual quote rather than estimating their own hours. Buyers should get a second one.
Related: asset-based-valuation, technical-debt, what-to-pay-for-a-pre-revenue-app, due-diligence-on-a-pre-revenue-asset
See what a business at this level is listed at.
Everything on sale between $50,000 and $150,000, on the same fields.