Reasonable compensation for building a product prototype


1

I'm negotiating a job to build a prototype for some people. They will show that prototype to investors and can potentially get funded.

Do people usually get compensated for this? If so, what should I ask for and how would I come up with that number?

Funding Compensation

asked May 28 '12 at 16:13
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Russell
180 points
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2 Answers


3

Generally, there are two possible ways to approach this:

  1. Ask to be paid for your work
  2. Ask for equity

Option #1 - estimate the number of hours it will take you to complete the prototype. Multiply that number by your hourly rate (Google "how to set hourly rates" if you don't already know). That is a figure you should be asking for. PROS: You'll get paid as soon as you finish the work. CONS: If their idea gets funded and becomes success, you won't get a piece of that.

Option #2 - ask for a piece of future company, in case they get funded. To understand how much you should be asking for, search "equity" on this website and you'll find many answers. PROS: You could generate a steady stream of income if their company takes off, without doing any work. CONS: You might end up with nothing if they fail.

Hope this helps. Cheers.

answered May 28 '12 at 17:58
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Pvukovic
561 points
  • Thanks for the pointers. – Russell 9 years ago

-3

Do people usually get compensated for this?

YOu must be joking. A prototype is a part of a complex development process. By any means, it is paid - in full, according to development time.

What's reasonable compensation for building a product prototype?

DEFINE PRODUCT PROTOTYPE. Seriouisly. Why do people come with questions that have ZERRO information and even think they get an answer. SOme prototypes are fast - weeks. Some take a 50 man team 3 months - because they are complex. What please is the product? ;)

If so, what should I ask for and how would I come up with that number?

How are you paid?

Fixed price? Estimate hourly work, put your price on it, multiply by 2.5 to 5 for fixed price. Work by hour? Simply estimate hours.

answered May 28 '12 at 19:31
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Net Tecture
11 points
  • A -1 without a comment. "Anonymous Coward" comes to my mind. – Net Tecture 9 years ago
  • (1) I'm not joking, it's an honest question and it's possible that the answer is "it depends". (2) Even if I don't define prototype, there can be a good answer for this. (3) Thanks for the info. (4) I didn't downvote you :) – Russell 9 years ago

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Funding Compensation