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Custom Software Services - Pricing and IP

• posted by: Louis van Tonder on 2015-11-27
• tagged: marketing, software, pricing, entrepreneurship, ownership
• score: 2

This question requires an understanding of Software Development/Source Code/IP.

Lets say I own a software business, specialising in creating custom software.

I can work out my quotations based on projected hours for the project, multiplied by my preferred hourly rate.

• Here I get the time I sold to the client
• What about the Intellectual Property? (I devoted a lot of time and resources to determine business processes, software processes, ideas etc)
• I sell the client the “use” of the software, by the source code stays my property (IP).
• The client may not re-sell this software, and only use it per our agreement.
• I am selling him “boxed” software (Just like any software he would buy), but with custom features.

In order to be successful, I need to make sure I sell my software and my IP at the right price.

I want to offer two quotation options:

Option 1:

I offer a quotation, excluding reselling of the software (It keep the source code)

This I can offer at: Hours * Hourly Rate

Option 2:

The client is interested in obtaining the source code for the custom software. He is tasking me to create a piece of software, that he will outright own, resell, anything goes. Thus I need to charge him more.

I can offer him a quotation at: (Hours * Hourly Rate) + Percentage Factor

As the software does not yet have any real value (Good standing in sales, clients etc), it is difficult to determine a price for this option.

QUESTION:

What is a reasonable, market standard/related percentage to add to my labour, for a complete buy of all source code and IP.

What are your thoughts about this. I am also interested in alternative practices that can be suggested regarding this situation.

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