Contract Madness - Need Help

[Yelena]

I agreed to make some modification to the Filemaker 6 database for one company at no charge as I wasn't familiar with Filemaker and I thought it would be good learning experience for me. They were happy with my work and they paid me $1000 although I didn't ask for any fee.

Now, they asking me to create a new Filemaker 7 database that needs to be completed in 60 days. The contract they sent me states that they will pay me $7500 for my work, and after acceptance of database, if they need any future modification they'll pay me $30 / hour. Also, they would have complete ownership to the software including code, documentation and my original graphic design, and they can use unlimited # of this software in their company

[Ocean West]

If you are in "Business" as a contractor you are the one who dictates the "Terms" they should be signing your contract.

You should make sure that your contract has liability limitations, holding you harmless to any incidental or consequential damages. And that you do not warranty or guaranty anything and your liability is limited to a certain dollar amount.

You can assign them rights to the works upon satisfactory completion - delivery made and consideration exchanged. You should however dictate that background knowledge and techniques learned during this project are retained by you, and that you have the right to reuse and redevelop said knowledge in to any other solution. You may consider giving them exclusive rights only to their "trade" where you would not compete in their market but would allow you to adapt your solution to other markets.

I'd be leery of the imposed time frame especially if you are new to FMP7. Make sure you do a complete design documentation prior to any work define the scope of the project and get it in writing and signed off by the client.

Also I would not assume they are the best judge of the time it would take to develop a solution (you are), I would avoid flat rate project but base it on an estimated hourly rate and estimated number of hours. Many times progress builds will create changes in scope of project and thus impact time to build, time to deliver, and cost.

How would you track the sales of the solution are they going t hire a 3rd party for escrow of the sales of product? or are they willing to let you look into their books?

If you are truly a contractor then yes you would be required to pay your own taxes. Unless you are an employee. - If you are an employee that is a totally different matter. You might look at some Nolo Press Books on the topic.

You might consider having an attorney review all documentation or have an attorney draft a contract for you.

[Yelena]

Your response cleared many issues for me.

Thank You

[Fenton]

I don't think there is a definitive answer; no one else can tell you what your time is worth TO YOU. As far as $30/hour, yes, that is a bit low. However, you said that that are not an experienced developer, and therefore would not produce the same amount of work in the same time as someone experienced. But maybe (probably) you're a quick learner.

And it depends on what they want. If it's all fairly simple, just extensive, then you will not be that much slower; but if any part of it is complex, well, the time can add up there. Of course, you can always ask here on the Forums, and we can probably get you over the rough spots.

As far as all the rest of it, hmm? It makes me somewhat suspicious when someone proposes to sell my work to the public. Not that I would not agree; but that it has to be absolutely clear, in writing, just what this means. And it's not just a money thing.

Another big problem as I see it is support. Who is going to support it? Them? I doubt they could.

So, unless you're careful you may find yourself agreeing to make whatever modifications they might want, AND support it for others, for a low fixed rate, indefinitely.

This is the part that I find somewhat ominous; to be bound to these people for the indefinite future; with no real agreement about the time frame or reponsibility for support. I would want some kind of reasonable time limit. If modifications are needed they should propose them fairly soon. If they want to wait and see what they need later (indefinite); that really should be a separate contract. It is more difficult and stressful to update a widely deployed solution, full of data, than to develop the same.

Technical support of the vertical solution should not be construed to be your responsibility. If they want to hire you, on a needs basis, later, they can - at a higher rate (support can be difficult, and I don't mean just technically).

Other than that it doesn't sound too bad. Especially if you have a good relationship with the company, and they are basically honest. But you really don't want to find out they are not AFTER agreeing.

Another big question: Can you do it in 60 days? What happens if you go over the time frame? Personally I would consider this a good test of what kind of people they are. If you're not sure you can finish it, and if they propose to punish you for taking a little longer, then I'd have to wonder if I could trust them to be fair.

You want to make sure that this "ownership" of the code and software, and prohibition against you selling it, only applies to the software as a whole, not every single part of it. So you can reuse pieces of it in other software you build. If they want to specify certain buttons as "theirs," I suppose that would OK. But they have to understand that most buttons, fields, and techniques are generic, so you can use them in other software you build. In other words, you will not "compete" with them, but you will continue to develop solutions, and some parts of them will have some resemblance to their software.

[Yelena]

I think I can finish this database in 60 days as I already created graphics and layouts and basic design. The database will consist of only one file and no more than 8 tables.

Technical support - good point. I don

[transpower]

Professional programmers charge anywhere from $80 to $120/hour now (a very few might be higher or lower); it's helpful to have engineering or math degrees and one or more certifications, although it's not required. By your own admission, you're not experienced, so you may have to accept $30/hour for now and raise it once you get more experience. I'm very leary of fixed project pricing because clients constantly change specifications. What I do is give a per hour quote and then a ballpark figure for the number of hours (not guaranteed) and a scheduled completion date. I allow the client to change specifications as the project proceeds (because I'm working on an hourly basis I don't care). My terms are on my Web site and on the back of my invoices.

[transpower]

I would add that you should set up a C or S corporation if you're serious about making a business in programming. You will then be responsible for paying federal and state corporate taxes. But consider the advantages: instead of being an employee and paying taxes on your gross income, your corporation will be paying taxes on your net income (gross minus all reasonable business deductions). So if your net profit is 5% of gross sales, then your taxes might be 15% (federal) plus 10% (state) for a total of 25% of 5% or 1.25% of gross. Compare that with, say, paying 30% of your gross as an employee. Of course, there is no security in this business--my company goes up and down with the general economy--but when it's good, it's very good, so I just save during the good times, which then gets me over the bad times.

[Yelena]

I will definitely consider your advice for my future projects.

Thank You