Ask HN: My client wants to resell the project, how do I handle this? | Hacker News Reader

Ask HN: My client wants to resell the project, how do I handle this?

12 points5Qn8mNbc2FNCiVV16 comments

Hey fellows, just got an email from my client that he showed off the software I built him and another person was so impressed with it that he wants to have that as well + some additional work.

Context about the project: It's a small application to managed some service flows from submission to handling logistics and creating offers and invoices. Really barebones, but nice UX. Code is not perfect and sometimes when I add a feature I do have to refactor a bit because I wanted to hit the ground running.

The project was a fixed price project and I estimated WAAAAAY too low for it so in the end I got 7k for around 200h of work (and still continuing as I need to add some features to fulfill the scope). My hourly rate at that point was 80€/h and I wasn't booked to the brim.

Now I have way too much work that pays a bit more than that but I'm in the dilemma of

a) not wanting it to be resold for the price he paid but the actual price in the end (his IP so he can have it all)

b) not wanting to have additional work at my previous pricepoint. I kinda also feel that since he as a business sold it to another business it's almost already enterprisey in the pricing and I can afford to raise my prices high (similar to how agencies cost 200+/h)

c) building a feature for any party that the other party wants as well

Any tips, recommendations or anecdotes are appreciated, I'm a bit paralyzed by that to be honest and couldn't do anything this day but I'll be able to answer any further questions that may need to be answered

What does your contract say about who owns the IP? If it is him, then this is a lesson learned on setting prices for your work. If it is you, just tell him that no, he cannot sell it.

Either way, if you delivered the work for the original contract, then it is over. Decide how you want to move forward, likely by letting them know that your rates have gone up.

Offer to be a cofounder, and turn it into a business with fair equity.

It's a hardware business, the software is just for managing a part of the process. Not a SaaS

Yeah, like that.

I was going to say basically the same thing, but you have said it better than I could have in many fewer words.

Well that's what the post is about, I don't know how to handle the moving on part or other directions of moving on. That he owns the IP and I made a mistake in pricing is already apparent

Whatever you do, get a contract in place if you don't already have one.

re: A. Under a standard contract in America, your client owns the whole thing. If that's not the case, you need to specify where you are and probably speak to a local attorney. If the standard contract applies, your client can resell for any price he or she likes with or without your permission.

re: b. Not wanting additional work at your previous pricepoint. This... doesn't make sense? You did fixed price work. So naturally any future work would either be bid or hourly, at which point you can quote any price or rate you like? What don't I understand here?

re: c. I don't understand how you have any commercial interest in work your client pays for, or whatever your client does with that work after he or she pays you for it.

If your client owns the thing, and resells it to another party, maybe you could offer to pool rates and charge each eg 1/2 your rate to build commonly requested features? To be honest, I'd personally hesitate to get in the middle of two businesses where each may have different acceptance criteria for features. It just sounds like potentially a mess, and I prefer to avoid messes in my life.

Also, you should be unashamed to charge the rates you want. If the rates don't meet a potential client's requirements, that's their problem, as long as you are fully booked.

A his property so he can license at whatever price he wants.

B it's not clear from your description that you are obligated to continue to work at a below market rate. Why not quote your current rate and accept he may not hire you. Consider setting a rate that you are happy if you get the work and not unhappy if they choose someone else because they won't pay your quoted rate.

C. This is a negotiation. Quote a rate that you are happy if they accept your bid and not unhappy if they are not willing to pay it.

Something that you'll want to help them with is educating them that the software is quite a bit more valuable _with_ you than without you.

Sure, another developer could come in and take over (and the acquiring company will probably want to get their own developers on it if they have an in-house team), but finding that trustworthy developer and getting them up to speed will be non-trivial for them without you.

Being open and transparent has served me well so far in the professional world. Tell them you made a mistake and ended up doing the original project far below your usual rate and that you're now currently busy with other projects. Let them know how long the original project took so they have expectations on how long new modifications might take.

Tell them that although you like working with them, in order for it to be worth your while and to turn down other opportunities, you'd need it to be in line with your usual rate of 80€/h.

You'll also probably want to get them to agree not to let the acquiring company know what your hourly rate is, as if they are enterprise-y you can definitely increase your rates (which is also warranted, since you'll be dealing with a lot more bureaucracy).

80€/h seems really low to me. I don’t think there’s a point of charging by the hour unless you’re doing very small features adds, tests, or maintenance work. I think one should always opt to get paid on a project basis.

I think it can go both ways (as shown by OP's situation of severely underestimating the work required).

If you have: excellent project management skills, can correctly estimate the required work, and have good clients who don't try to add "free" features half-way into the project, fixed-bidding 10-20% of the business value add can often work out better for you.

* Often that requires the client to have a good idea of how much they are willing to spend on the project, and how much additional revenue it's going to bring in (which is harder for smaller clients to do).

If any of the above is false, time-and-materials based pricing is often the better way to go in my experience -- it accounts for any "unknowns" in your estimation, and allows the client to add/change as many features as they want at any point in the project (it's easier to argue about a deadline getting pushed out than having to re-bid the project).

Make a partnership/deal/whatever with your client to develop, maintain, and support the software for him, this other person, and anyone else who might be impressed with it. The software will be better if it works for more people, each of them will pay less, and it could become a minor regular income or a full-on software business for you.

Is there anything in his communication to you that suggest he intends to resell it to their client and profit himself? Because if there isn't, I suspect this isn't something to worry about even if he legally can. He probably doesn't even realize he legally can unless you tip him off to it.

He may just be trying to match-make you two. In which case, drop your original client out of the communication loop as soon as possible, and deal directly with the new client as a fresh entity from which you can only gain. You are under no obligation to: give the new client the same terms as the old client, agree to do any work at all for them, etc.

Just charge your normal rate then, you already lost some money to begin with. If you accept the previous rate, you won't be happy working with him and probably lose better potential clients that would be will to pay you your normal rate.

If you own the IP, you do have the upper hand. In case your clients owns it, he would spend more money/time migrating to another developer, just negotiate with him and explain that you underestimated. If he doesn't like it, his loss.

Is this a https://en.wikipedia.org/wiki/Work_for_hire ? If so your client owns it and you may want to start charging for support. If not a work for hire you can charge the new client for their copy.

Referencing myself: please read my pinned tweet/thread[0].

- [0]: https://twitter.com/jugurthahadjar/status/131066829330549965...

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