The issue (I) see is this: Do you have a written contract? If so,
what is WRITTEN is binding. I see the _possibility_ of all kinds of
LEGAL troubles.
Suppose: You say "Goodbye", The company dies, He sues you for "breach
of contract"... and wins. OH NOES!
On the other hand, I believe verbal agreements rarely hold up in court.
BEFORE you make any large decision in this matter it may be prudent to
speak with a lawyer. As we all know, The U.S. is the MOST litigious
nation on earth
You have already made the statement that if he were to pay you the going
rate it would kill the business.
"Over the years, the company's revenue has increased"
"the owner must keep lowering bids each year to get a contract"
In essence you are saying that a theoretical maximum increase of costs
of $31,200 would kill the business, (Double the IT cost at full time
(2080 Hrs/yr), MUCH less if you work a few hours a week for him.
NO owner would willingly cut his own throat. So, a "raise" appears to
me to be out of the question.
Point here now becomes: Is this revenue stream large enough to put a
dent in YOUR wallet should it stop? With the economy as it is, I'd look
hard at that.
Do you have MARKET RATE work to fill in the gap LONG TERM?
Since the "relationship" is good, you need to weight THAT too. Does that
relationship bring work in via referrals etc?
Would severing the relationship harm your other existing streams OR hurt
your ability to create more streams?
Is the RELATIONSHIP important to you? Sometimes it is about more than
just money. Add that you said, you are replaceable AND that if you
walk, you will effectively slit HIS throat.
NOTHING will divide family/ friends/ relationships faster that money
based issues. I have personally witnessed a older friend lose a
lifelong friend since they were both 5 years old and end up not
speaking... permanently due to arguments regarding money.
Hope I've helped :-)
Wayne
07/10/2012 05:41 AM, keith smith wrote:
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 /<[email protected]>/* wrote:
From: AZ Pete <[email protected]>
Subject: Re: OT: Software Licensing Fees
To: "Main PLUG discussion list"
<[email protected]>
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" <[email protected]
</mc/[email protected]>> 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
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