Ask HN: Should I sell my software to my employer?

IANAL: Since the company offered to buy the software, they obviously don't think they have any claims on it. Of course, your legal position depends upon your local jurisdiction.

You don't say who is using your software. Is it your company's clients? Your company? Others?? How much are they saving, paying?

First step is to establish a discounted cash flow monetary value of the benefits of your software. About 20% to 30% of that might be an appropriate price for it. This estimate depends on numerous factors which are beyond the scope of a HN reply.

If the amount is much more than $10k, then you might have a viable business to establish a startup. In which case you should seek out competent legal advice and test the waters for potential investors.

Or, you could consider $10k as the starting point for negotiations. Based on the above estimate of its value you could counter with a far larger price. In any negotiation the first amount discussed is simply the starting point. As a basic principle you never accept the first offer, but counter with something far above what you think is reasonable. If you are uncomfortable with such heavy negotiations, then you could pay a suitably experienced lawyer to negotiate on your behalf for say 15% of the final amount.

The terms you decide on can preclude you from offering a similiar product plus the new contract you signed. The fact that he mentioned wanting to control his destiny probably means he wants total control over the project which could stop a similiar saas in the future.

If you want to sell use a lawyer to handle interactions.

Regardless of what you choose things can go sideways and your position might not be safe. So don't base it on that.

If you don't sell he may try to replace it and you. If you do sell they may start treating you differently and the autonomy may disappear. Being the highest paid makes you a good target in the type of company you describe. The fact that he wants to buy the software now is a red flag that they are thinking of replacing you anyhow.

I would say to the CEO don't worry you already control your destiny because I work here and I can't see that ever changing. We are a family.

Most of my employment contracts have typically contained a clause, where my employer gets to claim ownership of anything I’ve built or conceived while on their payroll that can be logically associated with the business.

If I was in this position I’d stop talking to my employer about this until having consulted with an attorney specializing in this field. Definitely do not sign anything between now and then.

I did sign a contract upon my promotion well after the new system was in consistent use, but not before. I was hired as an assistant due to the high workload of the previous process (to the extent you could call it a process). The company likely could not have expanded under the previous arrangement.

My employer is the same way. I'm surprised OP is in this position.

If you are having at least half the impact that you think you are having, and he's running a real business, decline the offer.

10K is less than peanuts for software. Go sell your software to his competitors for $x0,000 per month.

> They've offered $10k, which is not a life changing amount of money for me.

This seems too low to me, although without more details about your side project and how much revenue it generates, I can't say this very confidently.

> I suspect that rejecting this offer may eventually lead to a termination of my employment.

How much are you earning from your job in the first place, versus the amount you earn from this software?

I think there are a few possibilities: you can counter with a higher number if you like the company you work for, or you can counter for the same number plus a significant equity stake in the company, so that you retain some upside. If you want to get creative, you could even sell them a license to use your software along with source code access, but keep selling to third party companies yourself.

If you don't really want to sell it in the first place, then don't. I think a $10k is wayyyy too low to force a sale unless your software is trivial to replicate.

Software always needs to be updated.

Who do they plan to take over that job? What agreement will you have in place for future updates?

A better option would be to license the software to them.

You could even sell them a lifetime license to the software,and give them the code and allow them to modify it but not re-sell it.

This should allow them to do anything they want with or without you, but you still retain ownership rights to the software.

Then you charge a yearly maintenance fee to keep the product up to date and patched. Software improvement projects are scoped and charged separately.

Do you believe you could pivot to your own business versus giving up your potentially lucrative app for very minimal comp? You’ve already proven the model if you need investment if you can’t bootstrap from today to ramen profitable.

Perhaps evaluate if it’s time to swap the cushy job for more upside and control over your destiny. Most importantly, have an employment attorney consultation to see if this is even possible based on whatever agreements you have with your employer and your state’s labor laws around IP ownership while an employee. Once there’s clarity with regards to your ownership position, you can evaluate scaling or selling.

If you can you should get some contract where what you get paid is proportional to the value generated.

For instance you could get some % of revenue from the product, get stock in the company, or something like that.

Another way to do value based pricing is to set a license fee proportional to the amount of volume pushed through the software. That license fee would need to be figured out from the business context and some estimate of how much value the software adds, and what alternatives the customer would have to perform the process without that software.

E.g. for bespoke process optimisation software sold to a single huge enterprise customer I've seen a $xxxx fee per "batch" that the software processes, plus an additional annual fee for maintenance and support.

The concept of "batch" was domain-specific and related to the customer's goal, the software might need to be run 1 or 100 times in order to complete a single batch (with user intervention etc to tweak parameters or correct input data errors), it wasn't simply $xxxx per API call.

I suspect you are overestimating the value of your software.

The CEO/company presumably has:

* a known brand/trademark

* customers and relationships

* salespeople?

* a location, equipment, capital investment

* some industry know-how

You have:

* some software, that helps them capitalize on all of the above somewhat, with more efficiency / lese cost or something?

Is there something special about you and your software? Or, if you and your software disappeared tomorrow, could the CEO get some other developer to write more or less the same software?

Conversely, if the company/CEO disappeared tomorrow, are you in a position to utilize your software elsewhere?

Accepting may also lead to termination.

Do you have a way in place to turn off the software, to protect yourself in case of termination?

How much would it cost them to hire a software contractor to reproduce what you've made? Get your boss to ask for fixed-price quotes from three different software contractors. 60-70% of the median value is probably a reasonable ask for you to make, and anything above 50% seems the right ball park for a deal.

The value of a working system NOW that is in place, guaranteed working, and already trained .. is significantly higher that some quotes for an unknown result in the future.

The real value to the business of your system, if they thought about it fully, would probably be 150% of the quoted cost to replace it by an unknown quantity at some time in the future.

This is true, but it's also about giving the customer a strong sense that they have made a saving, making it easier to reach a deal.

You could instead (nonexclusive) license it to them in perpetuity.

Speak with a lawyer who specializes in something like business brokering. IMO, I would rather license out the software in your position, but we lack the details.