

First business negotiation.... advice needed - lagoa89

Hi everyone.<p>An experienced freelancing colleague wants me to work for free in return for a share of revenue from licenses on a new product. The other involved is someone with essential expert domain knowledge. I’d do maybe 50% of the coding but would be the junior partner. The rough figues look promising and he anticipates a finished product in about 3 months.<p>I’ve not done something like this before. What do you think is a fair distribution of revenue given the differing levels of experience, involvement and knowledge? I was thinking 40% for the senior developer and 30% for the domain expert and myself. When the product is finished is it right to insist that any hours spent on maintenance, additional features, etc are paid at the market rate as corporate expenses prior to dividends? Can anyone give me some general advice for negations of this sort?<p>We’re UK based by the way.<p>Please ask if you need any other info.<p>Yours naively,<p>David
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brk
I'd approach it like this...

Value your time at some number, say $50/hr (USD). Figure 50 hour work weeks,
so you should "earn" $2500/wk.

Accumulate your time until the product ships for revenue. At that time I'm
going to presume your time involvement drops significantly and the company
starts paying you.

You take 75% of the revenues (divided amongst all developers on this plan)
until you are "paid off" (or perhaps until you hit 80% payoff). At that time
you get 7-10% revenue as "royalties" ongoing.

Any additional development work beyond a couple of token hours/week at first
for minor fixes should be paid as worked if the revenues support it.

You may have to mess about with the numbers a bit, but this approach would
give you the greatest potential to get paid appropriately, and still
participate in the ongoing sales/success of the product.

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slindstr
I asked the EXACT same question a little over a month ago
(<http://news.ycombinator.com/item?id=1809874>) and what I did was I told the
guy that I wanted some equity and some cash. Long story short, I never heard
back from him which is funny because it was my friend's dad. There's some
really great advice on the link above though.

Make sure you get some cash - everyone has a million dollar idea

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lagoa89
Thank you both for the advice.

The poor spec stories from your link were sobering.

I know the domain expert was on the verge of paying an IT services company for
the work so presumably there are funds available. Maybe an equity/cash
arrangement would be acceptable. On the other hand I like the transparency and
fairness of brk's approach although of course they are not mutually exclusive.

Thanks again.

