Pricing Custom Software already developed


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I work in the POS industry. A third-party company with a very profitable concept has sold their software to some of my customers. They gave the software to them yet my customer had to call me to install it or make it work. I realized that the interface in which their software was trying to use to interface with my customers software did not work. Because I am loyal to my customer, I ended up writing a new interface from scratch and replacing what they gave them as an interface between their software and the customers. All was fine and good until this company has contacted me wanting my interface because I have the only working interface with this certain system in the country. The system that the customer is running has a very large market share in the country and this already profitable business wants to tap into this market. I originally tried to license it but they have an issue with someone else controlling the IP that is so successful to their business so they are asking for joint ownership and an hourly rate for new development so when the contract ends we both walk away with the rights to the code. They are not offering to pay an up front fee for what has already been created but from my analysis numbers on my customers holding my interface, this company has the potential to make anywhere from $13 million to $30 million within the next 3 years. I am going to turn this down unless the agree to certain terms of the IP and an up front fee based on the projected sales but I know what I think the price should be but would like others to comment... what do you think?

Software

asked Nov 13 '11 at 11:39
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User14390
1 point
  • What is your question? You have a very open ended "what do you think?" which is unhelpful and vague – Tim J 9 years ago

2 Answers


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You could sell them your "product" (that piece that you wrote) along with the IP to it so that they no longer have a problem with that issue. It would be nice to get something up front, but maybe all future value is a bit much. Instead, take some reasonable amount, greater than your invested effort, and make an agreement for some payment for each future sale. Auditing those sales may be difficult. I'd be inclined to let them maintain it, so you would sell the thing entirely.

Of course you have to be reasonable. What part of that 13-30 mil can you attribute to your piece? Also recognize that they can probably find someone else to write a new interface. Not easy, and not cheap, but possible. I assume you would want to continue making more sales like the ones you have if they don't come to an agreement. So figure out what that's worth to you. Or you may rather do more work with them in the future and create a growing arangement.

answered Nov 14 '11 at 12:18
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Patrick Ny
300 points

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Get an IP Lawyer. They know how this stuff works.

I wouldn't go for the all-or-nothing approach myself because I'm not so keen on the latter outcome. I, personally, would take an up-front sale and hourly rate. Any money you get for it is more than you got for it if they never wanted it, if you get my drift. They can make millions from it but that's mainly because they have established access to that market. Getting that access costs money and time. Again, just my humble opinion.

answered Nov 14 '11 at 12:36
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Cad Bloke
113 points

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