Share negotiation

[stahu]

Hey guys !

Im asking You for an opinion.

I've got an offer. I've developed a system for a company X.
It works well. I sold the rights of the system to the company.
Now, they want to sell it, but the system requires constant updates
and administration. They offer me share from the profit of selling.
I will be supposed to update soft, install servers if required,
also there are plans to make new soft.

I have to give them my proposition about my share, but I dont know the
share which I should start negotiation from. Could You give some advises ?
I thought about 20%, is it too much ? too low ? or maybe its ok ?

For the company, it is me or nobody, couz the cost of initiating somebody
else would be rather too big

thx in advance
greatz

[Ribeyed]

Hi Stahu,
Difficult one, personally i think you would be better of splitting this into 3 parts. Price for the initial cost of the development separate from the maintenance i.e. updates, new versions etc. and a initial install fee.
Correct me if i am wrong but im presuming that this company paid you a set fee to develop this system specifically for there use and there use only. The source code remains the intellectual property of yourself. This company is now asking to be a reseller of your software application.
In my opinion you would be entitled to ask for what your already charged them minus about 15%. You would sell your software to your reseller for 15% less then it cost them and then they resell it for a 15% profit(15% is 12% for there overheads and 3% clear) on each sale.
I would do the same for maintenance. Your reseller will offer the customer a yearly contract for updates and a install fee. The yearly subscription to updates can be work out to cost 10% of the cost of the software. So again charge your reseller 15% less than the 10%.
You should have a good idea how long it takes you to install he software. Work out how much you want to make for the total time it takes you to install and configure. I would charge this full amount and then let the reseller add 15% to the cost to charge customers.

Hope this helps.