wrote software that someone wants to use/license


4

I wrote a sudoku game and was contacted by a media company that is interested in using the application within an ipad application they are developing. I don't know how that would work since the game is free in the google chrome store, but that is another question. (I guess I can see how a media company would want a sudoku game as part of their suite).

My questions are:

1) what is an appropriate payment model for something like this? License fee per year? Just sell them the rights? What would the appropriate fee be?

2) If I need to develop new features/customize the application, should I charge them for that?

Thank you for your help...

Licensing Fees

asked Mar 24 '11 at 04:00
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Hvgotcodes
171 points

3 Answers


4

The first step is to say "I'm interested, what kind of terms did you have in mind?"

Let them make the first move. Don't worry about the numbers, just look at the structure of the deal (buy rights? annual fee? fee per user?)...that will tell you a lot about how they want it set up.

That way you're all on the same page in terms of the structure of the deal, and you're just negotiating price from that point. The less items you're negotiating against a larger company, the better.

As far as development, etc, I would once again defer to them on this. I think it's reasonable to have a set amount of customization baked into the price of the deal, with some agreement on overages, etc.

If they pay a license fee annually, it should include some baseline level of ongoing support and feature development. If they're just buying the rights, it should include a baseline level of support for their customization work.

You're really not losing any negotiating power by asking questions regarding structure of the deal at this point, so don't worry about that. Don't allude to your ignorance, just ask clearly how THEY want to set it up....and work from there.

answered Mar 24 '11 at 05:18
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Andy Swan
1,656 points
  • thanx for the reply...any insight into what price range is appropriate? I could just see what they say and if I like it go for it. But that leaves the possibility of getting too little. I just have no idea what a fair price for both parties is... – Hvgotcodes 8 years ago
  • I would let them throw out the first number, x, and then respond with something like "I really think this is a great fit, but considering this is (insert some negative here like it's an exclusive arrangement or will distract you from other builds, etc), I was really hoping for something more in the range of (2.5*x). If we can make that happen, we can get this wrapped up by (some day in the extremely near future)!" You get the point... – Andy Swan 8 years ago
  • You should read: http://hbswk.hbs.edu/archive/4302.html (When to make the first offer) – Anders Hansson 8 years ago
  • @Anders: +1 for the excellent link – Igor Brejc 7 years ago

1

What a great opportunity! Everyone (@Andy) already answered this with a slm dunk -- so I am only going to add a thought about this opportiunity.

Try this on for size:

The free version is on the Marketplace -- but the pro version isn't. What? You don't know about the pro version? The pro version includes (fill-in-the-blank-features-you-wanted-to-add). Now I was going to deploy the "pro" version into the Marketplace. Based on current volumne numbers at a $1.99/each price point and a conversion from free to "pro" of 23.5% I expect that this "pro" version will generate revenue of over $X in the first 30 days. If you would like to be the exclusive distributor of that pro-version bundled in your software I am sure that could be arranged.

You want:

  • a licensing fee
  • a royalty commission
  • a sales commission of conversion to their product from your free version

Now don't get greedy though -- the most important thing you could get is a working relationship where the commissioned your work for new games. :)

answered Mar 24 '11 at 06:48
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Joseph Barisonzi
12,141 points

1

If I were them I would want to keep you around for support and fixes and upgrades... This is chargable work and I would ask a modest retainer of something like 4 hours per month for $1k per month support, work out what is realistic ... Try for more but they have other costs besides you all hours beyond that put at an hourly rate that suits both parties. Use some of this time to explore new features that they can then pay for.

Royalties... You can ask of course but they have lots of other components and costs to worry about so going in too hard will just make them look elsewhere.

Again I would make it easy for them to say yes, structure it so it's a cost of their issue and you have an ongoing revenue stream rather than one big hit.

answered Mar 24 '11 at 10:38
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Robin Vessey
8,394 points

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