I could really need some advice concering the payment for a project I am starting with right now.
For my bachelor-thesis, I am developing a product for a woman, who wants to go self-employed with producing this product as soon as I developed it. At the moment, I am working on the contracts, and I dont really know how to set the payment.
I guess the proper way would be to sell her my designwork (meaning working hours) on the one hand and the rights to use this design on the other hand. She wants to get the product patented aswell.
My problem: when searching the web I found some examples for calculation based on my hourly rate (which isnt that high), which would conclude in huge sums cause its a big project, which I am very sure my partner would not be able to pay.
We already spoke shortly about financial issues and aggreed both that a good possebility would be to connect a part of the payment with a percentage of the benefit of sold units. So I would get more money, if the project gets a huge success, and she would not get in too big trouble paying me if its not working that well.
Do you have any kind of experience with this kind of situation, and this specifical type of payment you would be willing to share?
I’ve been in this situation, but not with the happy ending part. I would ask her to propose what she’s willing to pay you. Based on that amount, vs. what you feel you ought to be paid; determine what percentage of “ownership” is appropriate. If she gets your design, the patent, and you get not that much money with only the distant opportunity for more -should this thing ever go to market- that doesn’t sound very fair for a big project. If this were me, & I was really pumped to get this project moving, I would take the money, take the patent and issue an exclusive “license” to her. …Or, take the up-front money, relinquish the patent and take 100% of the profits on this thing until you are paid off.
It sucks to be the only guy working on something, hoping to maybe get paid. Don’t be afraid to get firm with her on this, your work is worth something!
Careful – the University may lay claim to work in whole or in part if it is done as a student project. Check the University policy before you enter any agreements.
Typically schools have a clause that give them the rights to some or all of the profits of anything you do for class credit. Definetly check with someone.
we did not yet talk about cash, so it would be unfair to say that she doesnt want to pay me. She actually said she wants to pay me before I said something about that. I just assume that she would not be able to pay me the amount I calculated with teh examples I found on the net (more than 15K € including full user rights…)
Value based pricing. What’s the product worth to her? What margins is she going to attract from the product? Is she intending on licensing the product? From your perspective, how much money would affect your quality of life? 50% of 15k is stacks more than 0% of nothing, and there is immense value to your career in having a product in production as a graduate.
Value it like you would a typical startup business (of which there are many models available). Or agree on an up-front price with a deferred ‘salary’ arrangement if her venture is still solvent after a few years.