How Much Can I Charge For Software?

In My Humble Opinion
1

I have designed and created a database for attorneys. It has been a work-in-progress for over 5 years and I have to admit, it is damned good.
They have been using here at the firm and love it and from word-of-mouth, a few other firms have asked for it.

I now have a few other firms who want it.

It is an MS Access database, but specifically designed for case management by attorneys. It has lots of special features that will save them time and staff.

So, how much could I charge for it?

Flat fee? ________ Licensing fee? _________
Per hour to “tweak it” for specific cases: $ _____

I know there is probably no right or wrong answer, but perhaps you could let me know what you pay/have paid for similar software.

2

Moved to IMHO.

-xash
General Questions Moderator

3

I have worked in all areas of IT including software selection. I have read a lot of contracts. Like any business, you charge what people will actually pay you for it.

That said, here are some numbers that I am making up but mirror what I have seen all over the place.

You charge all three fees. I don’t think that is negotiable.

Flat fee: $5000 for the whole company. You will have to decide if you do major upgrades and whether to charge again for those.

Licensing fee: $200 per desktop per year. Minimum 5 licenses.

Support/Training/Customization: $100 per hour

You could charge more if you were an actual company. Those prices are a little on the low side overall but I would have to see your system to be able to appraise it very well.

4

All of the above. I suggest a fee based on the size of the firm. Plus a yearly support fee which covers tech help and upgrades. And a per hour rate for custom development which requires more than a minimum amount of time. I don’t know how much you might have to pay Microsoft though to re-sell their application, but they’re gonna want something.

5

Given that you’ve developed it at work, you’d better check your employment agreements to make sure that it doesn’t actually belong to your employer.

They might not take too kindly to the notion of you selling a product that they hold to copyright to. Let alone selling it to potential competitors.

Just sayin’.

6

You don’t have to pay Microsoft for Access applications. The firm buys MS Office and you sell the custom code to go with it. Lots of people sell custom Access applications.

7

Thanks for the suggestions so far:

The firm will not mind me selling it - I have deleted anything relevant to them and have always put my name and copyright in tiny print on the front page from day one. Plus, a couple of the partners have even suggested I would be foolish not to go and do this.

I know there is no extra fee for Microsoft. It is up to the law firm to make sure their licensing agreements with Microsoft are up to date to use this application.

My brother worked for a company that sold real estate software and he suggested pricing almost to the penny of what you suggested, Shagnasty!

Any other comments or suggestions will be appreciated. As my current job ends in two weeks, looks like I will be hawking this product sooner than I had expected, but as mentioned - already have a couple of law firms who want me to show them the program. I just want to be prepared in case they want it.

8

I doesn’t matter who will and won’t “mind” you selling it. It doesn’t matter that you put your name and copyright on the front page. Who owns that database should already be spelled out in the agreement you have with the attorneys.

Are you an employee? If so, you probably signed some agreement when you hired on. Are you a contractor? You should have signed a contract which states who owns your work.

Do not assume that you can sell this database. You need something in writing which says the database is yours. The attorneys paid you for your work. You may or may not have retained ownership of your work.

You really should get your own attorney (not at that firm) to advise you on this.

9

Legalities aside, you can charge lots and lots for custom software. Right now the company I work for has a half-dozen programs in the field. Granted some of these have had 3 or 4 developers working on them for up to a year at a time, but you seem to have spent a while on yours too, so…

You do want to charge many thousands for the initial purchase. My boss (who owns the company) also offers a per-site licence, but I don’t know how much that costs. It might be of interest that when he charged per category of items that got entered in the software, the ‘Misc’ category got loads of things stuck in it, so per company or per-site would be my recommendations.

We also have support contracts, for which people get upgrades and a certain number of hours per month for adjustments, maintenance, feature additions, etc, plus my time gets charged out for > 100$/hour.

Note that you will want to write a manual for this thing, (well, maybe not, but clients will make you), and you might have to watch how people want to adjust the software - sometimes I have to say no to change requests since other companies wouldn’t like it.

I don’t know about you, but when I found out how much our software cost, I though “Whoa! That’s a lot!”, (and some startups asking for quotes think that about it initially too) but if you think about how the companies make millions, and how much your software helps them, your costs are a drop in the bucket.

10

That part is true. Custom software takes a ton of time, expertise, and money to develop. Most people don’t appreciate that because they get warped by the $39.99 packages with lots of pictures they see at the store.

I have worked on three software development projects that cost in the millions. They wouldn’t look like much to the lay person but they controlled how the business (large company) operated. I am working on a project now that has 30 consultants billing at $100+ an hour. Individual file extracts like Excel spreadsheets that have to meet quality control and long term production standards are running up to $5000 a piece. Software can get quite expensive but it can also greatly save the business time and money in the long-run.

Here is my advice to the OP:

  1. Writing a manual is essential and you should do that up front. You don’t charge directly for that but you can increase the costs if you feel you need to. That is essential for a professional presentation.

  2. I stand by my cost estimate although I made it on the low side because I haven’t seen the software. I would stand by a rate of $100 an hour for maintenance/udgrades/support. It is a nice round number and what a lot of people charge. Don’t back down on that number.

  3. You can set the license fee and license per user however you want but I gave you ballpark figures.

  4. You have to make yourself available 24/7 to deal with problems. It doesn’t sound like it would be an issue with this type of application but you never know.

  5. I am a sometime Access developer and have been for 8 years. It is a great development environment because it is fairly quick, robust, and easier than some others but this is also its downfall when it comes to enterprise deployment. You have to take a look at how users can and will screw with every single field, form, and report. Lock it down to the best of your ability. Make things table driven instead of hard coded. Implement security. Have backup and fallback plans in case things go wrong and they probably will. Deploying software to a place where an expert is not always on site will probably be very different than you are used to. It is up to you to make it as absolutely foolproof as possible and even then, someone will find a way.

  6. Have one of the lawyers you know draw up a contract. That covers several bases.

11

If you signed a contract stipulating that the firm owns any work you’ve done for them, this doesn’t matter. In fact, you should get it in writing that the firm grants you the right to sell this software. If you don’t cover your bases here, you stand to lose a lot of money–quite likely more than you’ll charge for the application.

12

Definitely don’t forget this. When dealing with the public, ESPECIALLY lawyers and ESPECIALLY with software, you need to draw the line somewhere on how much “support” they get for “free”.

Some users are totally a pain in the butt, call you every day, and want you to make changes they see as “simple” that will take you weeks or months to implement.

So, just make sure they understand, if they want to yap all day about changes to the system, that they are being charged to yap.

Good luck, sounds like you have a real good think going there.

13

I wouldn’t do a ‘flat-fee’. I don’t know what size firms are looking at your software, but you get more money the bigger they are. If you do a flat-fee, you are really giving away your software for too cheap. By all means, offer discounts on bulk licenses. But if a big 2000 laywer firm comes knocking on your door, you don’t want to have a measly $5000 per-site license option.

14

That’s why you have a user/desktop per year fee as well. The flat fee just ensures that a two person firm will be worth your while. A 2000 laywer firm would generate several hundred thousand dollars per year in yearly licenses alone.

The three component pricing system is well understand, standard, and tested. I wouldn’t mess with it.

15

I know this was a Long post to quote but I fully support it. I work for a rather large computer company and ANYTHING I realize here is theirs. Make sure you have your ducks in a row. Big companies are like Las Vegas casinos…they didn’t get rich off of the winners. :wink: Cover your butt.

16

Again, thank you all for your comments and suggestions.

I have been working on this for almost five years, non-stop. It has been tested by having as many as 40+ temps, multiple paralegals and several attorneys all working on it, at the same time, over the course of several years. Considering some of those people knew little about computers, and others were experts, every glitch has been removed and it is about as rock-solid, use-friendly as it gets. The only problems that have arisen in the last year or so are problems inherent to MS Access.

This program has saved the company hundreds of thousands of dollars and has reduced the work force drastically. Not incidentally, it has made them literally millions of dollars.

I will make sure I have the legal right to sell it, but I don’t see this as a problem. I was a contract employee and signed nothing. In addition, the actual program was modified for their specific needs, but the basic bones of the structure will now be adapted to make it totally unrecognizable from theirs. I also created three other programs for them for other departments that they thought were new - but in reality, were variations on the same program.

I know the firm has been billing my hours to the client at $150 an hour (trust me, I saw nowhere near that amount!) so I think the $100 an hour might be a valid fee.

I am still a little hesitant about the large initial fee, but that is probably because I don’t normally deal with costs like that. However, as it has been pointed out, for a large firm, this is chump change. And knowing attorneys, this will most likely be billed directly, or indirectly, to the client. Still, I have to get over this psychological hurdle to charge that much. It really will save them a ton of money - even in the short run - let alone the long run of a case.

I had never even considered a user’s manual, considering I taught everybody how to use it. Got it down to a science and could train someone in less than an hour. But you are right - unless I want to babysit them and get 100 phone calls a week, it is probably a wise idea to create a manual.

Again, thanks for the encouragement and words of warning. I will be starting this venture in the next few weeks and I already have a few prospective buyers lined up. Just have to prepare the package.

17

Just a couple of thoughts.

In the first instance it may be just as well to score a couple of good sales, regardless of the price they pay. They will boost your confidence and act as reference sites.

From my limited sales experience I know that a sales presentation not effectively closed is an opportunity lost forever. I think your attitude towards selling this software would cause me to not hire you as my salesman…maybe you shouldn’t be yours. Look for a pro.

18

I know what you are saying, and I don’t doubt you are right. Thanks!

Luckily, my brother wants to get involved and he used to sell real estate software for about the same price.

And although I am venting my insecurities here on the board, in reality, when I psych myself up for something, I do pretty well. I just need to make sure I am not woefully overcharging (or undercharging) when I finally make the plunge.