As a software developer, what kind of percentage commission do you expect from a company that licenses your product? In other words, if you create an application for a run-time engine and that firm gets to sell seats to run your product, what kind of percentages do you think are fair commissions?
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A:
Zero. I'm paid to produce software, and what I produce is a work for hire (in US legal terminology). Once I've written it, it's theirs.
If I were a contractor, I'd negotiate that, but I'd probably prefer a fixed amount of money.
David Thornley
2009-07-10 20:29:55
Interesting. I know that developers for iTunes apps expect around 30% of sales in the store. Would this answer change for you if you were building a utility app that anyone could use?
BRozental
2009-07-10 20:31:59
Developers for iTunes are independent businesspeople, if they get the standard 70% (the 30% is Apple's share). If I were acting as a very small software company, I'd want something in proportion to how important my contribution was.
David Thornley
2009-07-10 20:40:16
Well, obviously there are different revenue models. Depending on your needs and goals and your client/distribution needs and goals this can be negotiated and may be easier to make a deal. If the amount up front would be impossible to fund then the licensee would not be able to use the product. In some cases I would expect it reasonable to revenue share. Not a perfect example, but Peter Norton "licensed" his name to Symantec for a percentage of revenue. The bright folks at SYMC not only used his name on existing norton products but added his name to other products (continued)...
Tim
2009-07-10 20:49:29
(confinued)... that did not have his name before. They may or may not have benefited form Peter's name. When John Thomson took over as CEO for SYMC around 2000 he thought he could "have a little talk" with mr norton to get him to renegotiate the contract. Well, Peter just laughed. It was symc's fault for negotiating badly to begin with and then rebranding their own stuff as Norton's rather than the other way around. not that this has much relevance here, but a little related.
Tim
2009-07-10 20:51:27
Norton had a separate business going on earlier, and there was a lot of respect for the Norton name, largely because of Norton's Utilities. The rules are different between being an employee or an independent company, and contractors can fall in either category.
David Thornley
2009-07-13 14:25:46
A:
It all really depends on a few things
- how large is their customer base and expected sales
- how much tech support will you incur, or are they going to take it on
- how much would you charge to license directly and what discount is reasonable given all the other aspects of the arrangement
- how much value they get form your plugin/product
- how much it would cost them to buy your company
- how much it would cost them to develop your product themselves
- how many other competitors to your product exist (and the pricing for those)
and on and on...
I wrote some software for a hardware manufacturer. He was initially going to pay me to write a replacement for his demo code that interfaced with his hardware, but the demo was terrible. I offered to write a new app with a GUI and lots more functionality thinking I would get revenue directly from clients, as well as custom development referrals...
The jury is out on what course of action would have been best for me. The real problem was the tiny user community for the software and hardware...
Tim
2009-07-10 20:55:45