Taking % Rather Than Charging Development

theobserver

theobserver

Pez Lightyear
Dec 7, 2013
64
1
0
Hi Guys

Ive been developing sites for clients for along time now, and I would like to start investing in companies which come to me.

Theres one new project in particular who has come to me for a Web Dev quote. I feel its a project I would like to get involved with in terms of instead of charging for development, I would be willing to take a % of the company.

The new business is a web based company so development is a large part of the concept and it would be ongoing.

They are the experts in the particular niche so its not really something I could go off and do myself just as successfully. It would be a case of me developing the site and providing them with consultancy in return for a stake in the company.

Im just curious as to how I could decide what % I should take?

This could be an impossible question to answer, but im just curious as to how YOU would come up with a reasonable %

Cheers
 


You're investing your time / effort, which you could trade for money instead, so treat it like investing your own money. What percentage would you want for $x?

Consider the high risk, compared to just getting paid. You need to see their projections etc.
 
mattseh said:
You're investing your time / effort, which you could trade for money instead, so treat it like investing your own money. What percentage would you want for $x?

Consider the high risk, compared to just getting paid. You need to see their projections etc.
Click to expand...

Cheers for the reply, even then its a pretty tough call as that business is worthless at the minute as there are no assets or previous financial history. The particular project in question is being set up by an established firm who are experts in the industry so its not like just developing some random idea for someone.
 
Take both. That's what I do. I expect signing bonus (for use of my software) + full hourly rate + equity / royalties for maintenance and responsibility of ensuring the operation continues to run like a well oiled machine.
 
Offer a discount for a percentage. Protects your financial status if the product fails, allows you to possibly earn a lot more than you gave a discount for and also gives the client a sense of trust because now its in your best interest to do a great job.
 
I feel like y'all are not calculating in legals costs and risks.

If I have someone ask for a piece for something someone else is totally willing to do for a flat rate... I'm gonna go find someone else.

Unless you have some sort of totally unique value proposition that will be offered on an ongoing and continual basis, you're just presenting me with extra costs and potentially making the venture less attractive to future investors or buyers because there's some random coder that has a piece from years ago.
 
droplister said:
I feel like y'all are not calculating in legals costs and risks.

If I have someone ask for a piece for something someone else is totally willing to do for a flat rate... I'm gonna go find someone else.
Click to expand...

Depends on the project. If it's something small, then definitely, go with straight hourly.

Larger operations though aren't "set & forget" projects. They need constant attention & maintenance, and if you're operating one of those, you want a developer who has a vested interest in its success.
 
You must log in or register to reply here.
Top Bottom
Back