For several years, I've had an arrangement with a friend, as I've been
developing an application with the intention of marketing it when finished.
(FYI, it's an inventory control, POS, retail app.) My friend has a retail
business that is a perfect "target" for the application.
Here is my understanding of our arrangement.
From the beginning, he has served as a test site, putting up with
bugs, occasional (rare) lost data, and the inconvenience that comes with
using a program that is under development. In the end, he will get free use
of the complete application for his business.
What I get from the arrangement is obvious. Free guinea pig beta testing
in a real-time real-life environment, along with feedback on design and ideas.
Not a single $ has ever exchanged hands for the software.
To date, there has been no written agreement.
(Yeah, bad.)
Until recently, all was well...except the development was slower than he
would like.
A while back, my friend took on a biz partner who is now 50/50 co-owner of
his retail business. The new co-owner and I do not "jive" well. Neither of us
would unzip if the other was on fire, if you get my drift.
The Dilemma
Due to the above and other changes, the friend now says he wants to
a) pay me a monthly amount to "help" speed up the progress of development
since I've been doing other "paying" work and development on this application
is "on the side" (since it has produced no income.) My plan for this payment
was to invoice it as a monthly retainer amount for technical support of their
computer systems (which I also do for an hourly charge already).
But, I'm not sure this is a good idea...because he also said that he wants
to...
b) get a written document outlining our agreement, place the
source code in escrow, and provide a written "remedy" ...in case
"something happens".
He said it's because the new partner is concerned what would happen if
I were to die (or get mad at them and take my football and go home.)
I felt much better about (a) above until the (b) stipulation was
presented. The (b) makes me wonder what the partner's
intentions are (in addition to some kind of self-preservation.)
Above and beyond everything else, my goal is to retain 100% ownership
and rights and control to the program. I would rather avoid taking the
offered money than to create a situation that would lead to a legal battle
for ownership rights, a battle which I can not fund, but they can.
Thoughts? Advice? Warnings? Scoldings?
Mike
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Make him pay for the software maybe.
Al
-----Original Message-----
From: profoxtech-bounces@leafe.com [mailto:profoxtech-bounces@leafe.com] On
Behalf Of Mike Copeland
Sent: 22 April 2011 10:08
To: profoxtech@leafe.com
Subject: [NF] Software ownership and payment dilemma
For several years, I've had an arrangement with a friend, as I've been
developing an application with the intention of marketing it when finished.
(FYI, it's an inventory control, POS, retail app.) My friend has a retail
business that is a perfect "target" for the application.
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Author: John Weller
Posted: 2011-04-22 05:11:33 Link
I think the partner's suggestions are good ones. They are certainly what I
would want if I had bought a half-share of a business which was as dependent
on a piece of software as his appears to be. I was a one man band until I
retired and was very concerned about what would happen to my clients if I
were to have a bad car accident or a heart attack and was unable to support
them. If the written agreement was couched in suitable terms you could
still retain 100% control over the software.
It is common practice to provide an application for a down payment plus a
licence fee at annual intervals for which the client gets a certain level of
support and any upgrades for free. I would drop the notion of it being a
beta product and deliver a version containing all of the working parts as
version 1.0 (say) for a nominal sum. There would be a licence fee, paid
monthly, which would expire at a specified date, usually 1 year from initial
installation. You could have a routine which requires a new key to be
applied after a year perhaps. You would then use the monthly licence
payment to fund any support for the application with the surplus used to
fund development.
Obviously you would want to market this application so include in the
agreement the facility to use the business as a reference site to
demonstrate the application. As an incentive you could offer them a portion
of the first year's licence fee for any new client they brought in.
HTH
John Weller
01380 723235
07976 393631
> For several years, I've had an arrangement with a friend, as I've been
> developing an application with the intention of marketing it when
finished.
> (FYI, it's an inventory control, POS, retail app.) My friend has a retail
> business that is a perfect "target" for the application.
>
> Here is my understanding of our arrangement.
> From the beginning, he has served as a test site, putting up with
> bugs, occasional (rare) lost data, and the inconvenience that comes with
> using a program that is under development. In the end, he will get free
use
> of the complete application for his business.
>
> What I get from the arrangement is obvious. Free guinea pig beta testing
> in a real-time real-life environment, along with feedback on design and
ideas.
>
> Not a single $ has ever exchanged hands for the software.
> To date, there has been no written agreement.
> (Yeah, bad.)
>
> Until recently, all was well...except the development was slower than he
> would like.
>
> A while back, my friend took on a biz partner who is now 50/50 co-owner of
> his retail business. The new co-owner and I do not "jive" well. Neither of
us
> would unzip if the other was on fire, if you get my drift.
>
> The Dilemma
> Due to the above and other changes, the friend now says he wants to
>
> a) pay me a monthly amount to "help" speed up the progress of development
> since I've been doing other "paying" work and development on this
application
> is "on the side" (since it has produced no income.) My plan for this
payment
> was to invoice it as a monthly retainer amount for technical support of
their
> computer systems (which I also do for an hourly charge already).
>
> But, I'm not sure this is a good idea...because he also said that he wants
> to...
>
> b) get a written document outlining our agreement, place the
> source code in escrow, and provide a written "remedy" ...in case
> "something happens".
>
> He said it's because the new partner is concerned what would happen if
> I were to die (or get mad at them and take my football and go home.)
>
> I felt much better about (a) above until the (b) stipulation was
> presented. The (b) makes me wonder what the partner's
> intentions are (in addition to some kind of self-preservation.)
>
> Above and beyond everything else, my goal is to retain 100% ownership
> and rights and control to the program. I would rather avoid taking the
> offered money than to create a situation that would lead to a legal battle
> for ownership rights, a battle which I can not fund, but they can.
>
> Thoughts? Advice? Warnings? Scoldings?
>
> Mike
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Author: Jeff Johnson
Posted: 2011-04-22 08:23:25 Link
On 04/22/2011 01:08 AM, Mike Copeland wrote:
> For several years, I've had an arrangement with a friend, as I've been
> developing an application with the intention of marketing it when finished.
> (FYI, it's an inventory control, POS, retail app.) My friend has a retail
> business that is a perfect "target" for the application.
>
> Here is my understanding of our arrangement.
> From the beginning, he has served as a test site, putting up with
> bugs, occasional (rare) lost data, and the inconvenience that comes with
> using a program that is under development. In the end, he will get free use
> of the complete application for his business.
>
> What I get from the arrangement is obvious. Free guinea pig beta testing
> in a real-time real-life environment, along with feedback on design and ideas.
>
> Not a single $ has ever exchanged hands for the software.
> To date, there has been no written agreement.
> (Yeah, bad.)
>
> Until recently, all was well...except the development was slower than he
> would like.
>
> A while back, my friend took on a biz partner who is now 50/50 co-owner of
> his retail business. The new co-owner and I do not "jive" well. Neither of us
> would unzip if the other was on fire, if you get my drift.
>
> The Dilemma
> Due to the above and other changes, the friend now says he wants to
>
> a) pay me a monthly amount to "help" speed up the progress of development
> since I've been doing other "paying" work and development on this application
> is "on the side" (since it has produced no income.) My plan for this payment
> was to invoice it as a monthly retainer amount for technical support of their
> computer systems (which I also do for an hourly charge already).
>
> But, I'm not sure this is a good idea...because he also said that he wants
> to...
>
> b) get a written document outlining our agreement, place the
> source code in escrow, and provide a written "remedy" ...in case
> "something happens".
>
> He said it's because the new partner is concerned what would happen if
> I were to die (or get mad at them and take my football and go home.)
>
> I felt much better about (a) above until the (b) stipulation was
> presented. The (b) makes me wonder what the partner's
> intentions are (in addition to some kind of self-preservation.)
>
> Above and beyond everything else, my goal is to retain 100% ownership
> and rights and control to the program. I would rather avoid taking the
> offered money than to create a situation that would lead to a legal battle
> for ownership rights, a battle which I can not fund, but they can.
>
> Thoughts? Advice? Warnings? Scoldings?
>
> Mike
>
>
I had a very similar situation with a customer. Only add the fact that
he thought he owned the software. I was just writing it for him. I
wrote him a letter and told him, I owned the software because I wasn't
going to have someone else supporting my software - especially if I was
doing the work. I have done the escrow thing for about 20 years and
never had a problem with it. And I told him he had to pay me for me to
put him in front of other customers.
He was very happy to comply on all accounts and we are great friends and
his application is awesome!
Lesson learned was to get everything in writing ahead of time!
Good luck.
Jeff
---------------
Jeff Johnson
jeff@san-dc.com
(623) 582-0323
www.san-dc.com
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On Fri, Apr 22, 2011 at 4:08 AM, Mike Copeland <mlcopeland@gmail.com> wrote:
> Here is my understanding of our arrangement.
It's important you sit down and get a full understanding of the new
owner's understanding. Then you need to put it in writing.
> Until recently, all was well...except the development was slower than he
> would like.
> a) pay me a monthly amount to "help" speed up the progress of development
> since I've been doing other "paying" work and development on this application
> is "on the side" (since it has produced no income.) My plan for this payment
> was to invoice it as a monthly retainer amount for technical support of their
> computer systems (which I also do for an hourly charge already).
> b) get a written document outlining our agreement, place the
> source code in escrow, and provide a written "remedy" ...in case
> "something happens".
> Above and beyond everything else, my goal is to retain 100% ownership
> and rights and control to the program.
You need professional advice on what those terms mean. You have 100%
ownership in the sense of the copyright on the work. You have already
give him the right (license) to use the software for his own business.
You need to formalize that, granting them something like non-exclusive
right to use within their business in perpetuity. And that needs to be
defined carefully - can they use it in franchises? Businesses they
invest in? You need to consider and contract what rights they can
transfer and/or sell as part of selling the business.
> I would rather avoid taking the
> offered money than to create a situation that would lead to a legal battle
> for ownership rights, a battle which I can not fund, but they can.
First you need to settle the current situation regarding rights and
licenses. The source code ought to be available to the client should
you be hit by the proverbial bus. You need to decide what that
mechanism is, and what entails. If you're gone or unavailable, can
they bring in another dev to "fix" the program? What if you're not
available in a timely manner? Or if your rates are higher than what
their nephew offers to charge?
The second question is ongoing development, maintenance, etc. I'm a
big fan of time and materials. A retainer is okay if it benefits both
parties. But they ought to compete for your hours with your other
customers. And you could consider subcontracting the work if you don't
have the time to meet their needs, but want to retain control. The
only thing you can't make more of is your own time.
> Thoughts? Advice? Warnings? Scoldings?
Yeah, it's always better to do these things in advance. But this is
how wisdom grows. Things are the way they are because they got that
way.
--
Ted Roche
Ted Roche & Associates, LLC
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Author: MB Software Solutions, LLC
Posted: 2011-04-22 15:48:13 Link
On 4/22/2011 5:11 AM, John Weller wrote:
> I think the partner's suggestions are good ones. They are certainly what I
> would want if I had bought a half-share of a business which was as dependent
> on a piece of software as his appears to be. I was a one man band until I
> retired and was very concerned about what would happen to my clients if I
> were to have a bad car accident or a heart attack and was unable to support
> them. If the written agreement was couched in suitable terms you could
> still retain 100% control over the software.
>
> It is common practice to provide an application for a down payment plus a
> licence fee at annual intervals for which the client gets a certain level of
> support and any upgrades for free. I would drop the notion of it being a
> beta product and deliver a version containing all of the working parts as
> version 1.0 (say) for a nominal sum. There would be a licence fee, paid
> monthly, which would expire at a specified date, usually 1 year from initial
> installation. You could have a routine which requires a new key to be
> applied after a year perhaps. You would then use the monthly licence
> payment to fund any support for the application with the surplus used to
> fund development.
>
> Obviously you would want to market this application so include in the
> agreement the facility to use the business as a reference site to
> demonstrate the application. As an incentive you could offer them a portion
> of the first year's licence fee for any new client they brought in.
>
> HTH
Ditto what John said. You can charge them a usage/license fee and
retain 100% ownership. Offer to put the source code in escrow but be
clear about the terms. Get the right legal wording for that. Look into
g2data.com for escrow. I don't use an escrow yet but would consider
them if I did. Customer pays 100% of the escrow cost...not you. Get
some $$$ for your efforts now. You'll be good! Sell the idea that they
are getting a great deal and it's a mutually beneficial agreement. As
much of a toolbag as the new partner is, you'll have to lose that
because it will only hurt you.
--
Mike Babcock, MCP
MB Software Solutions, LLC
President, Chief Software Architect
http://mbsoftwaresolutions.com
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Author: Jarvis, Matthew
Posted: 2011-04-22 17:36:27 Link
> -----Original Message-----
> From: profoxtech-bounces@leafe.com
[mailto:profoxtech-bounces@leafe.com]
> On Behalf Of Mike Copeland
> Sent: Friday, April 22, 2011 1:08 AM
> To: profoxtech@leafe.com
> Subject: [NF] Software ownership and payment dilemma
>
> For several years, I've had an arrangement with a friend, as I've been
> developing an application with the intention of marketing it when
> finished.
> (FYI, it's an inventory control, POS, retail app.) My friend has a
retail
> business that is a perfect "target" for the application.
>
<snipped>
A few years ago I offered to do a not huge, not small IT/dev project for
a friend of mine in exchange for goods that his company offered. I
figured it would take me about 40-60 hours and most of that would be
fussing around with some video related equipment to get it "just
right"...
He said no thanks and that he'd rather pay someone top dollar to do it
and since I wasn't comfy with that, asked why.
He said it was because he wanted to be able to get on the phone and yell
and scream at the person doing the work and not feel guilty about it.
Thanks,
Matthew Jarvis || Business Systems Analyst
IT Department
McKenzie-Willamette Medical Center
1460 G Street, Springfield, OR 97477 || Ph: 541-744-6092 || Fax:
541-744-6145
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On Fri, Apr 22, 2011 at 5:36 PM, Jarvis, Matthew <MatJar@mckweb.com> wrote:
> He said it was because he wanted to be able to get on the phone and yell
> and scream at the person doing the work and not feel guilty about it.
Word.
That's a wise man.
--
Ted Roche
Ted Roche & Associates, LLC
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Author: Mike Copeland
Posted: 2011-04-26 03:11:32 Link
Mike,
Thanks for the input!
Do you mean IG2data.com?
I can't find a G2data.com.
Mike
> Ditto what John said. You can charge them a usage/license fee and
> retain 100% ownership. Offer to put the source code in escrow but be
> clear about the terms. Get the right legal wording for that. Look into
> g2data.com for escrow. I don't use an escrow yet but would consider
> them if I did. Customer pays 100% of the escrow cost...not you. Get
> some $$$ for your efforts now. You'll be good! Sell the idea that they
> are getting a great deal and it's a mutually beneficial agreement. As
> much of a toolbag as the new partner is, you'll have to lose that
> because it will only hurt you.
>
> -- Mike Babcock, MCP MB Software Solutions, LLC President, Chief
> Software Architect http://mbsoftwaresolutions.com http://fabmate.com
> http://twitter.com/mbabcock16
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Author: MB Software Solutions, LLC
Posted: 2011-04-26 07:52:34 Link
On 4/26/2011 3:11 AM, Mike Copeland wrote:
> Mike,
>
> Thanks for the input!
>
> Do you mean IG2data.com?
>
> I can't find a G2data.com.
That sounds right.
--
Mike Babcock, MCP
MB Software Solutions, LLC
President, Chief Software Architect
http://mbsoftwaresolutions.com
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