Questions about licensing my Web Application

[DavePhillips]

Hi all,

I have developed a web application and have found a company that is wanting an exclusive license to manage, market, and sell subscriptions to my web application for me. I'm comfortable with the arrangement, but I'm unsure as to what to charge as a license fee.

I have gotten them to agree to allow me to earn a royalty based on a percentage of the revenue they charge for each subscription. The number that has been thrown out is 30%. So for example, if they sell a subscription for $10 per month, I get $3 per month and they get the rest.

I do not have to put up any money. I will be continuing to develop and enhance the application as well as supporting it technically. However, I will not be providing END USER support. I will provide support to the company that is marketing it. They will deal with the end users.

I will also make myself available to customize the application for any of their customers, however, I'm sure they will charge extra for this, so in essence, I will get extra since I would get 30% of the revenue.

My questions are as follows:

1. Is 30% a fair amount? What's the standard?

2. Does it sound like a good deal to you? Is there anything I should be asking for that I haven't mentioned?

3. Any other comments/suggestions?

Thanks for your input. I welcome it. This is the first time I've had the privelege to do this, so I'm very excited, but want to be sure I do it the right way.

Sincerely,

Dave Phillips

[LeeU]

Dave,

Congratulations!

You didn't mention if you have an attorney. That would be a good move as it would be up to him to find out what is norm in this case.

Also, you said you would receive commision on the revenue from the product. Does the contract state it also includes the custom installation or just the product? (Again, a good reason for an attorney.)

Lee

[DavePhillips]

Thanks!

Yes, I'm working on getting an attorney to handle the contract. There is no contract yet. Basically, I tell them what I want and they will probably agree to it, unless it's outrageous.

Since the 30% is a royalty on their revenue, if they charge 'installation' fees to their clients, then I would get 30% of that. That's how I want it structured basically. I just don't know if 30% is enough, or if it's too much. I want to be fair, but not get scrooged in the process.

Thanks,

Dave

[LeeU]

Great! I used to work in the legal field so I am suspect of using terms like "revenue" without defining what exactly it means. But if you have an attorney, he "should" be taking care of that.

I would ask him to find out if that is a fair fee.

Lee

[Nevermore]

Originally posted by DavePhillips,
I do not have to put up any money. I will be continuing to develop and enhance the application as well as supporting it technically. However, I will not be providing END USER support. I will provide support to the company that is marketing it. They will deal with the end users.


That's the part I would be suspicious of; make sure you aren't doing hours of work for no extra money. If they want you to enhance it, they should be prepared to pay for it.