Selling an android app to a very large university.

Question

I created an app for the bus system at my university and they want to buy it off me. Problem is, I have absolutely no idea what to offer. Its nearly completed, and once they buy it i would be brought on as a student employee making $25 an hour. They would want me to hire someone else to start on an iPhone version, and implement other features. Its an app everyone with a droid would use, since its sorely needed. 20,000 people go here, and most of them have smart phones. If anyone has any advice, or a reference they could give me it would be greatly appreciated.

Answer 1

One word "royalties". Depending on your situation it might be better to simply ask for a small royalty for each copy distributed. Or you can sell them the exclusive distribution rights for a set amount and then charge an additional, much smaller royalty for each copy distributed. Whatever you can negotiate that ends up costing them far less than it would cost for to develop the app is also a win for both of you. Don't be greedy, but DON'T sell yourself short either. Anyone can code, not everyone can design, code, test, and launch... hope this helps.

As for an amount... it is too tough to really pin it down, depending on your financial situation $5,000 could be huge, or nothing. Or $20,000 could be astronomical and a deal-breaker... but then again, Microsoft originally bought DOS from a Seattle programmer for $20,000 and they did not change it much before launching it as MS-DOS...

Answer 2

Is there a chance that other universities might want it as well? Perhaps you could sell non-exclusive rights to your University and retain the rights to sell it to others?

Another possibility is to negotiate a deal where they buy it from you and agree to pay you 50% of the revenue when it is sold to another university.

Of course this depends on whether you think anyone else might be interested in it.

Answer 3

You are the only one who can truly answer this question. Why? Because no one here knows that app better than yourself. Only you know how much time, energy, and money was invested in this project; therefore you are the only one qualified to determine the final dollar amount.

If you are already near the end of the development cycle, getting paid $25/hour wont do much to properly reflect the app's worth, so I suggest:

(estimated time planning + estimated time designing + estimated time coding) * 25.00 = net app worth

Answer 4

Calculate Worth & Cost

How much did it cost you to develop it in hours and equipment? Put in a 'risk' factor since you made this investment before making a deal.

For example, you value your time at $25/hr. If you spent 50 hrs working on it and you used $2000 worth of computer equipment, you can estimate your cost at $1250 + $2000 or $3250. Given that you risked your investment because there was no certainty it would be bought, you should put a risk factor of 5x or so on that. E.g. $16250 is reasonable.

Now, how much would it take the university to redevelop now that they have the concept, know it's valuable, and know what the solution looks like? It sucks that you essentially 'educated' them for free, but the reality is they will have this in the back of their minds. If they are convinced that 'Joe Coder' is able to reproduce your work just as well with no management overhead and no risk for 40 hours at $12/hr they're going to peg the 'worth' of your work at $480.

So, either you're going to be negotiating with someone who doesn't want to try and find 'Joe Coder' and doesn't want to manage a project (or doesn't want to manage a potential failure) or not. This person will swing between a 'fair' value of $480 and $16250 based purely on their point of view. You're going to have to figure out which side of this estimation they are on and do your best. Don't be surprised if they offer you $1000 plus $25/hr from now on and feel they are totally fair.

In The Future

This would be why 'non-disclosure' and signed agreements before coding starts are popular in the software development industry :-) Most people have no idea how much time & effort really gets poored into software development projects. And its a fact of life that 'rip-off' reproductions of existing solutions are cheaper because the 2nd developer is walking straight from beginning to end with a map in hand.

You'll also find that as a 'young individual', the risk of you being upset with the deal causing a ruckus is considered small. However, having spoken to a lawyer and inserting the fact that you have some form of legal advisor into the negotiations can work wonders on improving their willingness to consider your point of view.

I bought a house a 23. The bank gave us a terrible time because they didn't want to offer a mortgage to college kids. After six months of run-around, we spend $120 on a legal consultation. Telling the bankers 'on the advice of my lawyer, I have to...' resulted in closing six months of negations in three short hours. In your case, insisting on a contract and saying 'I'm going to have my lawyer review this' should do the trick.

Answer 5

Look up your location on the different salary websites. Also check your government pay scales. Then start adding costs:

• cost of equipment
• cost of internet
• cost of taxes
• cost of accountants
• cost of lawyer (you need a lawyer)
• cost of insurances (health, life, etc)

Then, add a factor related to self-employment - your "expected duty cycle". If you work 50% of the time, double your "salaried" wage, since you will be unemployed 50% of the time and have to compensate.

Then, add a risk factor - how likely are you to be not get work? get laid off? etc.

Then add the profit factor.

Don't be shy about rating your skills. $25/hr is your "base wage". I'd expect you to rate your sole-employment work over $50/hr.