We are a small shop that have developed a platform for developing applications that can run both in the cloud and on premise, A PAAS offering. You could compare it to Microsoft XRM or Salesforce - AppForce.
We are talking to a potential customer, who are considering rewriting their current application on our platform. This is all fine and we are discussing licensing models, but they also want an option to at a later time, be able to buy a non exclusive source code license where they want to be able to do what they want with it, excluding competing with us and reselling the source code.
How would this affect the value of our company, and what do you recommend for this situation?
Your customer wants to ensure that they will be able to continue their business, even if you are no longer reachable. This is quite common, but its usually done using source code escrow. In source code escrow, a third party holds the source code and releases it if certain events happen. This service may be expensive, so usually after its agreed upon, nobody ends up actually going and and doing escrow part.
In my opinion, if a customer is offering you money, the correct response is to take it.
Easy to asnwer - yes. They are just ensuring they can protect their investment of building on your product.
The hard part is figuring out the price. Do you strike a price today? a formula for if/when they want it? Depending on your cash flow you might want them to buy it now for 3x or 6x the current price and get the money in the bank rather than waiting for the remote possibility that it will eventuate.