"Licensing" of Already Delivered Software? 57
Matterama asks: "My partner and I are treading on thin ice. We delivered six microprocessor controllers with source code libraries to a customer, under a written agreement to negotiate the license for that code from us once they got it working with their system. That time is upon us, and we realize that we do not know how to go about this (yep, we're pathetic). They want to buy 1000 units, and we are not setup to be a Microsoft (nor do we want to be). If I'm going to get a good, simple answer that puts money in our pockets for our work, it will be here. Can Slashdot recommend solutions or sites with solutions?"
Try this? (Score:4, Informative)
I.e.
May modify code and build modified binaries, and redistribute binaries.
May not distribute their source code in any form.
Re:Try this? (Score:5, Funny)
If they go for it
Re:Try this? (Score:3, Funny)
Tut, tut. I shall ask for only 1% of the first license (rounded down: $0.00), 2% of second license (rounded down: $0.00), 4% of the third license (rounded down: $0.00),...
Clearly, my offer is much more generous than Glonoinha's, so I urge you to take me up on it.
Re:Try this? chessboard (Score:2)
With two to the one-thousandth power pennies, he could buy Microsoft. And indeed all of Redmond. And Washington State. And the other forty-nine states. And all of the European Union, Japan and China. And the rest of the world. And then he could fund the wholesale terraforming and settlement of Mars, and still not have come close to spending it all...
Re:Try this? (Score:3, Interesting)
Re:Try this? (Score:2)
Consult an attorney... (Score:5, Insightful)
Re:Consult an attorney... (Score:1)
> business decisions on replies from
Money, maybe ?
Re:Consult an attorney... (Score:4, Insightful)
Keep in mind this is different from product recommendations or other such things: this is a serious matter, at least it would be if it were not asked on Slashdot.
Well... (Score:5, Interesting)
First off, there are two distinct possibilities. Either they'll be a customer again in the future (in which case they have a vested interest in helping you out) or this was a one time thing. In either case, just ask them honestly what there budget for the project is. Do this
Don't sell on cost, sell on value (Score:4, Insightful)
In either case, just ask them honestly what there budget for the project is. Do this /after/ explaining your expenses; that is, how much you want and why you want it, broken up (honestly) into sunk costs, future development, and the stuff for your pocket.
No no no, don't do that! Your costs have nothing to do with the price a customer will be willing to pay. One of the basic tenets of capitalism is that goods trade at or near their perceived value. If that value exceeds your cost, you make a profit (congratulations!), if not you take a loss. How much profit you make is direct compensation for the value you added to the parts you obtained before selling the result to your customer. This is the true meaning of "value added" (not to be confused with the "value added reseller", a synonym for "retailer").
Once they quote a budget, if it's reasonable, take 80% of it. If it's not reasonable, say so. That'll make them want to come back.
Now that's good advice, or at least almost. There are two schools of though on deals: "Everyone should feel some pain" and "Everyone should feel happy". The former is based on non-recurring sales, where you can squeeze all the profit you want and then scorch the ground. The latter assumes that your repuration with this customer is valuable to you, and theirs with you likewise. If you believe in recurring sales (usually a good thing!), you should always leave some money on the table, although I'd say 20% is too much.
Simple answer (Score:4, Insightful)
If I'm going to get a good, simple answer that puts money in our pockets for our work, it will be here.
Yep: get a lawyer. Also, don't ask for legal advice on Slashdot.
Re:Simple answer (Score:3, Funny)
Re:Simple answer (Score:2)
If that's what they're asking for, that would be a problem. However, they're asking for business advice.
Once they have an idea of what kind of deal they want to cut, they should then go talk to a lawyer about how to put together the documents. A good lawyer will also help raise issues that they may not have thought of.
But walking into a lawyer's office before you know what you want can get awfully expensive. Asking here is perfectly appropr
What it the goal? (Score:5, Insightful)
In short, license it in the most liberal way you can to allow your company to keep the value invested in it without ruining its value to the buyer (they have been working with it all this time, if they lose the ability to alter it now they won't be happy).
Split this one up (Score:4, Insightful)
1) What do they get now (binary usage, source usage, source ownership) at what price
2) What will be your ongoing relationship (will you provide bug fixes, future versions, telephone support) at what price.
Make sure you handle both sw and hw.
But, the key thing is to talk to a lawyer who knows this area and understands the tradeoffs between different approaches, especially between proprietary and open source.
Can You Deliver 1000 Units? (Score:5, Interesting)
If you can't meet the contract's terms, the license won't be your real problem.
That said, use your head about the licensing terms. You have every right to construct a license that is in your best interests. That's not being "Microsoft", it's just not being stupid.
If your business future depends on your exclusive access to that code, you may already be in trouble, since you agreed to negotiate terms after the potential customer has their hands on it.
If you believe there's a lot of future profit to be made selling that code, then negotiate a license that allows you to do that and prevents this customer, and future customers, from selling or otherwise distributing the code. Yes, this is not in keeping with the spirit of open source, But, are you willing to trade the existence of your business or your future livelihood for the warm fuzzies you get releasing it as open source?
If the code has nothing at to do with your future business prospects, you might as well hand it out on street corners.
It's easy giving things away when your bank balance isn't at stake.
Re:Can You Deliver 1000 Units? (Score:1)
Re:Can You Deliver 1000 Units? (Score:2)
Unless the customer can buy the controllers from soneone else and burn the code on them. If that's the case, these guys won't be running a business next week.
Re:Can You Deliver 1000 Units? (Score:2)
So true.
There are two major issues here:
a) Do you have an enforceable contract? For delivery of 1000 units of something to a customer I've never dealt with before, I want my lawyer to look over the purchase order/contract and tell me it's OK. The lawyer will tell you whether or not they can back out of it after you've bought parts/assembled boards and leave you screwed and how to fix that. Lawyer's cost will probably be less t
You don't have to be Microsoft.. (Score:5, Funny)
Slashdot?!? (Score:5, Funny)
copyrights are easy enough (Score:5, Insightful)
When it comes to copyrights and licensing, the law is on your side to begin with. If you deliver 1000 units with your software, and no license, then they can use the software in the usual way, but they cannot redistribute, copy, etc., etc.
You can grant them additional rights through a license, or you can REMOVE their rights with a *signed* *contract*. Contracts and licenses are different things. Usually a contract includes a license, just to keep things simple, but look at the GPL or other open-source licenses, they are not signed, because they aren't contracts.
So what I would do in your situation is come up with a contract that says you will deliver the units for X dollars, and include a "license section" in the contract that simply says they can't copy, redistribute, perform, reverse engineer, whatever (look at some open-source licenses for ideas).
If you don't have experience with contracts, then definitely get a lawyer since a contract is so "general". But when it comes to software licensing I wouldn't sweat it. If they do anything with your software, the law is on your side, you can sue (you might want to register those copyrights too, by the way).
When I enter a contract with a costomer, my biggest fear is "what if they don't pay, and there's some loophole in here", not "what if they start selling my program", because unless you explicitly give them that right, they can't sell it. Then again I'm an open-source-minded guy, I don't believe in per-copy licensing fees, I only charge for labor and "set up fees" and so forth. I go out of my way to simplify the licensing for the customer.
Just remember that a lawyer is going to go out of his way, making your license as complicated as possible, for *his* benefit.
Re:copyrights are easy enough (Score:2)
It's true that you did this in the wrong order - you should have had an agreement with price first - but that's water under the bridge, and it sounds like you have a decent working relationship with your customer, which is worth more than any signed contract.
You could always ask them what they think is fair, and what they would like from you in the future. This might sound naive, but they might come back with an offer
Don't be so sure (Score:1, Flamebait)
When it comes to copyrights and licensing, the law is on your side to begin with. If you deliver 1000 units with your software, and no license, then they can use the software in the usual way, but they cannot redistribute, copy, etc., etc.
If these guys have only one customer and no contract and have already turned over samples, they should watch out. The code might be deemed a "work for hire", especially if they took cash to produce the samples. If so, the copyright rests with the customer, not the pro
Facts (Score:3, Insightful)
In short, be a hard bastard!
Re:Facts (Score:1)
Actually, the law often takes into account "prima facé" evidence in leui of a written agreement. I've been here before.
This is the "if it looks like a duck and quacks like a duck, it is most probably a duck" style of law.
IANAL.
Re:Facts (Score:1)
Ridiculous! You do not need a license to use software (or any copyrighted thing). You need a license to make an otherwise illegal copy of the software legal.
In other words:
Re:Facts (Score:2)
This same principle allows me to legally operate ROM images in emulators of videogame consoles that I no longer own, but still have dozens of cartridges for sitting in storage.
Re:Facts (Score:2)
Dare I even mention this.. (Score:2, Funny)
Step 2: Meet to negotiate license
Step 3: ????
Step 4: Profit!!!
Cost (Score:5, Funny)
In fact, triple the number, then you can give your customer a big discount and they'll love you for it, and you'll still come out ahead.
Re:Cost (Score:2)
My first job was at a tiny company with less than 10 employees that sold I/O boards and embedded controllers on the retail industrial market.
The general rule I learned was take 5x parts cost and consider that your base price. Next, look at the competition and adjust that base in the right direction (our niche was a low-cost specialized I/O supplier) so we came in a little lower. Unless it was a custom job, we
Bad move (Score:5, Insightful)
That probally means nothing. You need to see a good attorney ASAP, because you probally don't have any kind of valid contract.
You. Are. Screwed. (Score:2, Informative)
After you get out of bankruptcy, try to remember this incident, mmkay?
Negotiate payment BEFORE A SINGLE LINE OF CODE IS WRITTEN. Your contract starts with a MINIMUM amount, which MAY INCREASE depending on the work involved in the project. Don't EVER give the client a chance to screw you, BECAUSE THEY WILL.
Re:You. Are. Screwed. (Score:2, Insightful)
If you do business with people who will screw you just because you can, you're fucked no matter what contracts you have. Even if you have 100% airtight agreements written by the world's best lawyers, a malicious client can make your life a living hell. As my lawyer says, "
What's the problem, exactly? (Score:2)
It depends (Score:2)
Figure out what terms you want, tell it to a laywer, and voila... instant EULA!
Of course, it could be that you don't even WANT a license. If all you want is to ensure that the customer doesn't copy, distribute or modify your software, all you really need as a simple copyright. And you ALREADY have that! The only thing a license is good for is if you want to further restrict you
How to hire a lawyer (Score:4, Informative)
2. The Yellow Pages
3. The County Bar Association
Some people worry they can't afford a lawyer. You have a deal for 1000 units, so this is not your problem.
Some people have an irrational fear of actually picking up the phone and making an appointment with a lawyer. If this is your problem, stand on your head and take ten deep breaths. Consult with a doctor before beginning any exercise program.
You're in a really strong position (Score:2)
An agreement to agree is not an agreement. You're in a really strong position. But you may have trouble convincing the other party of that.
When you need to do some heavy-duty convincing, go with one of the major intellectual property law firms. I use Townsend and Townsend and Crew [townsend.com]. I've spent about $50K with them over the last decade, and it's been worth many times that.
Re:You're in a really strong position (Score:3, Informative)
This is when you need the intimidating law firm.
Possible Problem (Score:2)
Since you have already given them the code before working out a license you might run into some problems down the road. If you have anything that you wanted to keep a trade secret or something else analogous to that, you may have a hard time now because you handed over the code.
That aside, what it seems like you were asking is for some ideas for fair licenses that still get you money.
I would suggest the
Think about Cost, Value and Relationship (Score:2)
The second
Two numbers (Score:2)
First is your cost. Figure out all the time and money you put into this. Ask yourself questions: What's that time worth to you? What would it have cost if you had paid somebody else to do the work? And so on.
Second is the value that they will receive from using your work. If they sell their 1000 widgets, how much do they make? If they couldn't use your stuff, how much would they make then? If they have exclusive rights to your work, is that more valuable? Et cetera.
Now
Business Models 101 (Score:3, Informative)
What you do not want to do is to ask your customer to set the price for you. In any negotiation, you have to make sure you control the conversation, make the initial offer, and steer it along the lines you need. This means something like the following:
a) compute the development costs for the system. Be realistic and honest. Do not discount your and your companies time/efforts/equipment.
b) compute the production and support costs. Rampup is not cheap, requires procedures be developed. Support is not cheap. Requires people/procedures.
c) compute the space costs, and other indirect costs of doing business. These are not cheap. If these folks are your only customers, then all your indirect costs are due to work on their behalf. If they are one of several, try to apportion the fraction of the indirects that are due to their project to this.
d) sum up the costs. Call this variable $cost.
e) now what profit do you need to make? Look at it this way. If the customer stopped ordering after the 1000 units, how much money would you need to stay in business for a month or two if they are the only customer? Figure out what a reasonable profit is for this. Call this $profit.
f) now sum together $cost + $profit and divide by 1000. That is your price per unit to your customer.
Once you have this price, do not, and I repeat, do not tell this to your customer. Give them a number 10 - 20% higher.
They are going to negotiate with you over the price. Their goal is to minimize their costs. Your goal is to attain the number you need ($price + $profit). These two are incompatible without agreement, so you start a little high, and let them talk you down to their number. You get a concession for this number. They help you find another customer, or they promise to order another thousand or so. That is, it is in their interest to provide you what you want, in order for them to get what they want.
Note: if the customer simply says "OK" and starts writing a check, you have made a critical sales mistake. It is called "leaving money on the table". The customer would likely have been happy with a higher number, which means that you missed out on that profit.
Remember, you do not want to gouge your customer. If what you deliver is critical for their efforts, they will be willing to negotiate with you. Just be aware that the stances that some folks take when negotiating can be infuriating, no matter how cordial the relationship is prior to that.
Your goal is to build a long term supplier relationship with these folks. Repeating revenue is much much better than a large revenue infusion. The latter will seem bigger, but it is harder to maintain business with this. This is why everything is going to subscription based services.
As for the software, well, this is going to be unpopular here, but tough.
Open source does not a business model make.
It is a bad strategy if there is value in what you have done here. You may want to grant the customer freedom to modify the code, or to hire others to modify the code (why, thats revenue off your company, or if you are a small operation, food off your table). You can give them the right to alter the source code.
Do not give them the right to redistribute the source without your permission. This is a bad thing if you have competitors who would benefit from seeing the code.
GPL advocates are likely to be up in arms over this. Runs counter to their thinking. Then again, when you have a family sitting across from you at the table, and you are worrying where your next che
WHAT!! No Common Sense? (Score:1)
Lawyers are overpriced and their use should be tempered with common sense. Find a good contract lawyer.
Write-off the first six as prototypes/examples?? Ouch!!
Do you have sense of self-preservation? Your customer has a stronger business sense than you and your partner!!
Weeeelll... (Score:1)
(1) Tell them they owe you, oh, I dunno, 2.7 hojillion dollars. Um. Per 7/11ths copy.
(2) ???
(3) Profit!