OT: Software Licensing Fees

Tue Jul 10 05:41:02 MST 2012

Andrew makes a good point of things must be win-win.  Sounds like they are not.  If the business is not viable, it may be time to cut your losses.  A sad fact, however this decision is the harsh reality of being in business.

It does sound like the business is hanging in there though.  Might be a good time to re-negotiate a more limited relationship.  From what you are saying you are not that easily replaced - from a financial perspective.  Of course you will have to take into consideration what your desired compensation is.  I would guess the business owner knows things are not as good as they could be for all involved.  

Maybe if you start by educating the business owner about your current compensation level, market compensation for a PHP consultant, you being at risk, etc, and then ask how to make this arrangement win-win, you might be surprised at what might be offered.

------------------------

Keith Smith

--- On Mon, 7/9/12, AZ Pete <plug at cactusfamily.com> wrote:

From: AZ Pete <plug at cactusfamily.com>
Subject: Re: OT: Software Licensing Fees
To: "Main PLUG discussion list" <plug-discuss at lists.plug.phoenix.az.us>
Date: Monday, July 9, 2012, 11:52 PM

    Hi All,

    First of all thanks to those folks who responded with some helpful
    points.

    To clarify some of the questions asked:

    I understand with glaring clarity that I'm am replaceable and know
    making demands never works.  Over the years, the company's revenue
    has increased. But also over the years, I've spent more time adding
    features. It was probably my fault for not clearly detailing how
    much time I'd spend adding features & functionality versus just
    maintaining the existing application.  Last year I did a bit of
    calculation on how much time I spend on maintaining and improving
    the application versus my percentage of revenue compensation and I
    came to a rate of about $15/hour. 

    While in the very beginning of this project, I did it more for the
    learning of building a large application and the money was a nice
    side job. But now, it seems the hours got longer (due to
    significantly increased code base) and the pay didn't keep pace.  At
    ~$15/hr it's just not worth the time to keep staying on the
    project.  However, to get the compensation to a more "market-rate"
    level seems very difficult.  The revenues for this business market
    (its academia & government) has been going steady down (the
    owner must keep lowering bids each year to get a contract). Looking
    at the numbers coming in, if he had to pay me a market-rate for
    programming, his IT budget would double or more and the business
    would go under.  Which leads me to think that perhaps this isn't a
    viable business anymore if one can't make enough income to cover the
    costs of infrastructure.

    Maybe it's time to let this one go...

    Thanks for letting me rant!

    Peter

    On 7/9/2012 8:01 PM, Mark Phillips wrote:

      I don't quite understand what is going on.
      Has their gross revenue remained flat for all these years, do
        you are not making add much as before? Or, are you now thinking
        that the percentage is too low? 
      Are you spending more time maintaining their servers and
        performing updates than when you started? Are you creating new
        functionality for them? 
      Mark
      On Jul 9, 2012 7:16 PM, "AZ Pete" <plug at cactusfamily.com>

        wrote:

           Hi

              All,

              I'm in a bit of a quandary about fees I'm receiving from a
              long time client and thought I'd tap the PLUG brain-trust
              to get some input.

              This situation is this:

              A few years ago I developed a PHP application that a
              client uses to run their business (its a typical LAMP
              platform). Without getting into tedious details, this
              software application is used to run their entire
              business.  It is understood that the software ownship
              resides with me and they are paying for its use -
              licensing it, if you will.  At the start of this project,
              we agreed upon a certain percentage of gross revenue that
              I would receive as payment for use of this software.

              In return, I would maintain the software, provide various
              updates or additions, and some light server admin work to
              keep the application running.  This arrangement has been
              working quite well and the business relationship is
              excellent. However, I feel now that the percentage I
              receive is too low (it hasn't been changed since the start
              of this venture).  I have broached the subject of having
              to update our arrangement, but was met with some
              resistance.  

              I wanted to ask fellow consultants/contractor/software
              devs what is the "going rate" for such an arrangement.

              Namely, if you are licensing a software product to a
              client for their use, what is a reasonable percentage of
              gross revenue a business should expect to pay. Especially,
              a software product that is the core component of their
              business without which the business wouldn't exist.

              Any thoughts would be *very* appreciated.

              Thanks,

              Peter

          ---------------------------------------------------

          PLUG-discuss mailing list - PLUG-discuss at lists.plug.phoenix.az.us

          To subscribe, unsubscribe, or to change your mail settings:

          http://lists.PLUG.phoenix.az.us/mailman/listinfo/plug-discuss

      ---------------------------------------------------
PLUG-discuss mailing list - PLUG-discuss at lists.plug.phoenix.az.us
To subscribe, unsubscribe, or to change your mail settings:
http://lists.PLUG.phoenix.az.us/mailman/listinfo/plug-discuss

-----Inline Attachment Follows-----

---------------------------------------------------
PLUG-discuss mailing list - PLUG-discuss at lists.plug.phoenix.az.us
To subscribe, unsubscribe, or to change your mail settings:
http://lists.PLUG.phoenix.az.us/mailman/listinfo/plug-discuss
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://lists.PLUG.phoenix.az.us/pipermail/plug-discuss/attachments/20120710/5db6cb07/attachment.html>