6 months ago the company i work for (not a tech company) tested a new distribution method that was made possible by some software that an employee came up with. It saved us ~$600k for that quarter. They intended to expand it but apparently the employee demanded $1,000,000 for the software and the company parted ways with this individual. So now they don't have the software but would like to have it. I offered to make something like it, but don't know what to charge.

It's not a huge project - I'm estimating 40 hours to make it usable, another 40 maybe to add some very useful features. Should I do it at an hourly rate, a flat fee, a percentage of the savings. I've done some small 5 hours to code, one time use projects at $35/hour but this is completely different.

any thoughts?

12/15/2005 8:50:48 PM

That's some bullshit.

If it saves $600k in three months, how is it not worth less than twice that to purchase it?

12/15/2005 8:52:54 PM

don't settle for less than $300,000, get you a house out of it

12/15/2005 9:01:52 PM

I assume you do not work for this company now?

12/15/2005 9:08:42 PM

Quote :

"the company i work for "

12/15/2005 9:13:46 PM

also, i forgot to mention...

the analysis can cheaply (but crudely) be done with an excel spreadsheet, and was done this way in the first test phase. doing it that ways means having 100 locations be responsible for importing data into the spreadsheet and correctly interpreting the results. definitely doable, but definitely much nicer to have a custom app. so there's a lot of room between a basically free to produce spreadsheet and a more usable custom product.

[Edited on December 15, 2005 at 9:57 PM. Reason : .]

12/15/2005 9:57:15 PM

How big is your company that it saved 600k a quarter and no one has thought of this yet that such a seemingly simple app can do it?

12/15/2005 10:02:55 PM

we do a few hundred million in revenue a year. we've grown A LOT in the last 5-10 years though so this idea didn't really apply so much until the last few years. there's really only 2 opportunities a year to test this idea. they've been playing around with it for about a year and a half. so they're a little behind in getting this thing moving maybe

12/15/2005 10:09:59 PM

Quote :

"6 months ago the company i work for (not a tech company) tested a new distribution method that was made possible by some software that an employee came up with."

I'd check your employee agreement with them. Most sensible companies have clauses in there such that they own everything you do so they should have already owned this software. If he demanded $1,000,000 for the software that seems dangerously close to extortion.

Quote :

"So now they don't have the software but would like to have it. I offered to make something like it, but don't know what to charge."

I really don't think you'd be able to charge them anything unless you quit and sold it to them as a vendor. You should definitely check your employment agreement with them, but I'd be very surprised if there is no clause in there giving them ownership over everything you do (usually on and off the clock).

12/15/2005 11:36:05 PM

Quote :

"the company i work for (not a tech company)"

seems key.

Most non-tech companies don't think of the fact that their employees may come up with exploitable ideas...

12/15/2005 11:38:07 PM

just make sure to do it on your own time, so it'll be your software, and you can market it elsewhere if its good enough. my dad made some programs for his work and he had to duke it out with his company with a patent lawyer because of ownership rights since he created the programs at work.

^^just saw your comment about on AND off the clock. i guess if thats part of the agreement, then you'd be screwed.

[Edited on December 15, 2005 at 11:47 PM. Reason : .]

12/15/2005 11:46:19 PM

^^Doesn't really matter. If you signed any sort of non-compete, they could argue that. If you use any of their equipment, software, or servers, they also own anything that comes from that. If you signed any sort of employment agreement at all, you're usually not going to be able to develop something for the company and then demand to be extraodinarily compensated for it.

^Yes, its called a "moonlighting" clause and prevents you from doing various things like that on your own time. Since this isn't a tech company, the chances of that type of clause (or an invention clause) showing up in your employee agreement are pretty slim, but you still want to make sure you do all of the work on your own time and on your own equipment and software. I'd definitely read over your employment agreement before starting any of the work. Most people don't even know what types of clauses are in their employment agreements - they just sign them. You can actually negotiate those things, but unless the company really wants you they'll tell you to fuck off if you try that.

[Edited on December 15, 2005 at 11:57 PM. Reason : .]

12/15/2005 11:57:03 PM

Legally, you can't charge anything if you do it on company time.

12/16/2005 12:49:44 AM

Just tell me what they want, I'll write it on my companies time and I'll split $texas with you... but you get the Mexican half.

12/16/2005 1:16:25 AM

80 hrs of work to save 600k / qrtr?

12/16/2005 1:26:49 AM

^ well, 80 hours to create the tool that allows those savings. once the tool is made, people have to use it.

i don't have a contract, but there is an employee handbook. i'll have to check that for any appropriate clauses. i kinda doubt they'd have anything like that in there though

12/16/2005 7:43:47 AM