

Ask HN: How would you license your software? - Aegean

I never used any Ask HN credits before, but I really need some help here on a topic that might be of interest to some of you.<p>We are a software startup. For us, not only pricing is the issue, but the licensing scenario. Overall, the mixture of pricing and different licensing options become a confusing problem. E.g. how much software rights, and for what price?<p>We have a piece of reasonably complex code that is in prototype-to-product/near product stage. This is an embedded software product.<p>Normally similar products are licensed by big firms with a royalty-based license. For example, many devices get mass-produced, the software vendor gets a share.<p>The problem is, this information is kept secret and I don't know how much they charge as royalties. Worse, being clueless about competitors, we might just lose a lot solely on imprecise pricing. Should we charge 300k? Should we charge 70K? Or 1M? 1M for a license might sound a lot, but all are valid possibilities that other firms are charging. Even if I am not going to charge 1M, it would be nice to know if someone else is charging, so that I know how much of a difference I am making to the customer.<p>Here's another licensing scenario: Whatif another software firm would like to take the software, make a derivation of it and re-license it themselves? Should I charge them a whole lot more? How would we license it in this case, i.e how much rights should we give them...<p>It takes a geek very naturally to write the good software, but when it comes to selling it, it seems we completely lose the grips.
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makecheck
As far as access rights: as an engineer I don't want hoops to jump through;
not because I'm going to steal your tech tomorrow, but because simple terms
make debugging easier and keep the lawyers away (frankly).

Ideally, start with an existing license that your client's lawyers have
probably seen already, so that there are no delays in approving it. Also, make
sure it has the terms you want; making changes is _also_ a pain for
engineering, since it could mean waiting weeks or months for legal to approve
new license terms. Such delays could break your client and kill your contract.

As for cost; keep in mind I haven't tried to run a software business, but I've
worked with lots of tech, so the following is _just my gut feeling_ , what
seems reasonable to me:

I would start by calculating the maximum possible setup cost, and the likely
ongoing development cost, under the assumption that your business exists to
serve one product for one client (even if it doesn't). This tells you your
high end; it's what your client would probably pay to develop their own stuff
in-house. They are coming to you because they want to pay much less than this
amount.

Then, factor in the rest of your business. Think about expansion. Will you
always develop one-shot, highly-specific tools for clients, or will there be a
few generic things that give you steady income from lots of sources? If other
products will share in repeating costs (e.g. air conditioning, salaries,
replacement servers), estimate what percentage will fall to this one project.
Consider this your absolute minimum cost, because it still assumes reasonable
success in products you may not have developed yet.

Given these two extremes, pick a number. :)

