Funding Development

[Eric Handbury]

Hello,

We are a software company which develops financial software. We have one
customer who wants a number of additional services. Some of these
additional services would be good to put in our core products that we sell
to others. The customer is willing to pay for these additional services
but obviously wouldn't like to pay for them and have other competitors
also have access to them. However, these additional services would be very
expensive for us to develop on our own, and the client also doesn't want
to wait for us to 'get around' to doing them... they want them yesterday.

So any suggestions as to how I can get them to fund the development, but
retain most of the IP so that I can sell them to others?

TIA. Eric.

[fp]

You could offer a return on investment if you make any money on the future
enhancements or offer an equity position to fund ongoing development of
custom features that may make it into the core product.

[Mark Carroll]

In article <***@news.supernews.com>,
Eric Handbury <***@hotmail.com> wrote:
(snip)

Post by Eric Handbury
So any suggestions as to how I can get them to fund the development, but
retain most of the IP so that I can sell them to others?

We would normally do that sort of thing at or near cost, so much
cheaper than we would otherwise, then give them a year or two of
exclusivity, then let them annually renew the exclusivity for some
large fee. It depends on the financial area, but oftentimes in finance
the important thing isn't so much that they're the only ones, as that
they're clearly the first.

-- Mark

[ivan sutton]

Post by Eric Handbury
We are a software company which develops financial software. We have one
customer who wants a number of additional services. Some of these
additional services would be good to put in our core products that we sell
to others. The customer is willing to pay for these additional services
but obviously wouldn't like to pay for them and have other competitors
also have access to them. However, these additional services would be very
expensive for us to develop on our own, and the client also doesn't want
to wait for us to 'get around' to doing them... they want them yesterday.
So any suggestions as to how I can get them to fund the development, but
retain most of the IP so that I can sell them to others?

I suggest that you build the application fro the client while targeting
other potential users to increase sale of the product. The client wants
certain functionality and should therefore have it without question. If you
are an application developer, it is a good thing to let prospects know that
your solutions are scalable. Starting with your core product, enhancements
to target a specific clients particular needs should be a standard practice,
and your should developa pricing strategy to accommodate these enhancements.

As new modules are added, they become part of the core product.

In addition, wherever possible, deliver applications through the web. This
allows you to bill for a product, and then charge rent for the life of the
client. In some cases, companies charge a set-up cost to brand the product
for the client, and a monthly fee for use. The ASP model is a strong one
allowing you as the Application Service Provider to "turn on" modules as
clients demand, and price accordingly.

If you build it, you will have long term gain. This client may be the first
to use the new modules that you need to create but they wont be the last.

Simon