0

Initially, the client hired me for a project without mentioning any profit-sharing or assistance with commercialization. However, after investing approximately 30 hours into the project, I've produced a solution that far exceeds their expectations. Now, they're proposing a partnership where they would take 50% of the sales revenue and contribute to the selling process.

I currently possess the license for this solution. Throughout our collaboration, which has included three video calls (every call is free), the client insists that the time spent explaining their vision should be considered as sharing ideas with me. However, I have concerns that their involvement may be more of an opportunistic move, given that I've been working on a similar project for the past seven years.

I should add that the client is not fully open about what he wants in this regard. I am worried that he wants to clarify these new terms before he pays for the solution. He hinted that he probably wants a written contract.

Am I obliged to share the license and share profit under these new terms? Additionally, what potential issues could arise if I agree to share it?

Improve this question

1 Answer 1

Reset to default
0

When considering a "partnership" of any kind, one needs to evaluate the proven skills of the other partners. In a situation like this, they are asking you to take on risk based on their ability to sell the solution.

What is their track record of selling? Do they have a solid sales and marketing plan? What is their record on being able to sell investors and bankers on providing financing for their venture? If they are not able to get the financing, that says a lot about their ability to generate the sales.

Note: In any market, only 2-3 people out of 10 who want our products are able to pay for them. We will have people ask us to "build it, let them sell it, and share the profits." Most are not able to generate the sales. I've tried a couple, got no sales.

At this point in the project, it sounds like you neither have a written contract, nor any up-front down payment or payment for the hours spent. That means that you have zero, repeat, zero obligation to them for anything.

The "knowledge" that they have shared with you is most likely "generally known or available" by "third parties" and thus, is not "protected company secrets."

Successful salespeople are able to sell investors and bankers on providing the funding needed to pay you in full the amounts you need to develop their product. They are then able to fully own what they bought from you and sell it keeping all the profits for themselves. In other words, successful salespeople don't need to share profits with you.

Improve this answer
14
  • David, thank you so much for such an amazing answer.
    – F. Zer
    Commented Mar 15 at 15:44
  • Could you clarify this: “ The "knowledge" that they have shared with you is most likely "generally known or available" by "third parties" and thus, is not "protected company secrets." ?
    – F. Zer
    Commented Mar 15 at 15:44
  • You are right; zero payment so far. I am taking the risk to spend all this time without any financial risk on their part. If I wasn’t successful, I didn’t receive anything.
    – F. Zer
    Commented Mar 15 at 15:46
  • @F.Zer When I sign an NDA, most include phrases like that for information that is not protected by the NDA. The point of that sentence is to say that they most likely did not share any information on those video calls that puts you under any obligation. They might have shared some hopes and dreams, but that is not hard company information that needs protection. I've signed a lot of NDA's and gotten extremely small amounts of hard company information. Most information was readily available or was a hope that might never happen.
    – David R
    Commented Mar 15 at 15:52
  • 1
    @F.Zer When trying to sell something to someone, one of the considerations that the buyer has is "is it cheaper to buy this or cheaper to make it myself?" 30 hours is something that another developer will say, "I can make it." and not buy from you. 3,000 hours is a lot harder for the in-house development team to make - especially if sold at 10% of the price to develop. When we can sell to multiple people at a cost lower than they could build it, it is a lot easier to sell. The "protection" of your product is in the cost to recreate. Large cost = large protection.
    – David R
    Commented Mar 30 at 15:09

Not the answer you're looking for? Browse other questions tagged or ask your own question.