How Much Ownership Would YOU Expect?

The following is my personal thoughts, not to reflect upon programmers i general.

Partnerships are tricky. It all boils down to effort vs. compensation, and when putting a product to market, you never know how sales might go.

5% of thousands of sales would keep me happy. 50% of a dozen wouldn't make it worthwhile. So I can't just pick a commission number that is gonna work.

Would you expect these folks to continue improving and developing even if sales aren't happening? Would you expect them to share your vision of "this thing is gonna take off!".

Any deal like this requires a fair amount of faith in your abilities. After the heavy programming work is done, it's up to you to make it pay. What if YOU get hit by a bus?

Personally, unless I was more hands on in the overall success (with a partner I trust) I would just ask to be paid directly for work, and upgrades when needed.

-Ryan

Yes...we did the same in the starting phase , Weaver was started with 5 Employees only..In the Initial phases didn't had much sales and revenue , But we paid them for their work and gave few bonus payments when weaver got profits .

I appreciate your concern for your about your teammates,
Work hard, teamwork can sort out everything .. find out what was missing in your previous products and in sales procedures followed by your Team , Fix it

If you are hired to program something, then most likely you have signed a NDA and are not allowed to copy or sell the idea that you were hired to program.

So in my opinion a programmer is not entitled to any commissions or rights whatsoever UNLESS that is apart of the original deal and plan.

Am I wrong?

lerxtjr: I am a programmer and an etnrepreneur both online and off and know exactly what you're talking about.

The "I bought a $100 utility on a freelance site and sold it for millions" thing is an urban legend, like many other get rich schemes that polute online forums. This like starting a garage band and going platinum this year. Could it be done? Yes. Is it likely? No.

If you're programmers worked hard, made something unique nobody else has made and people are willing to pay for it; I'd say its worth real money. Like more than $100. Do an honest evaluation of your situation privately. Say your programmers both up and disappeared. Could you duplicate the results? How much would it cost you? Did these guys already do a bunch of R&D that has increased YOUR knowledge assets (in addition to the tangible code, sometime just a well distilled/proven idea has value in itself).

I've seen many partnerships/start-ups fail from greed/pride and none that failed from lack of opportunity. Think about that one... IMO, Business is about people more than it's about products.

Although I agree with your good intentions, you mention that it's you who want something: "I'd like to keep my team more involved by giving them a commission of the sale."

If I were you, I would ask them what they want. Do they want commission? Or they want a bigger salary? And you are already paying them for the work they do, so it's not really commission for performance. It's some kind of reward, but based on very unclear performance (as they are not making the sales).

It also depends on culture, basic salary, motivation and so on... I've heard of managers giving some % of the sales to their staff, and they end up getting more in commission than they get as basic salary. That resulted in a complete drop in productivity as there were no longer any obvious reason to work harder. Not everyone is chasing the multi-million dollar dream, some will settle for "enough is enough".

You might think about other way's to reward your staff, such as letting them go to seminars for free, free training, an extra week off and so on. It's always interesting to see how happy someone is to receive a free movie ticket after they performed well, compared to just handing over $10.

Have a look at what Dan Pink has to say about it:
You could also go for a completely different approach. Your goal is to keep them motivated right? So give them total ownership of the plugins and you get reseller rights with a lifetime of free/paid support and upgrades. Not saying that's the way to do it, just thinking of alternative approaches. Anyway, just thinking...

Wow, great feedback everyone, thanks. I was sort of thinking after reading this that a mesh of everything combined might be a good next step. Payout like maybe $300 for an exclusive reseller licensing situation. That would cover the basic cost to produce the product. Put the code into a sort of escrow so that we would have access to it if something was to happen to the programmer. Then, offer a licensing fee per install, of say $10 of the $30 I plan to charge, which would eliminate the word "commission" from the conversation.

In the event that someone "bigger" wanted to buy the software, part of the agreement would be that my company would get half the buyout value since it would be because of the popularity my company generated for the product.

Waddya think?

I do like the comment above too that I should ask the programmer what "he" wants. So, presentation of this would come after I hear that.