A couple of times per week i field emails and messages on forums about developing software for people. Very rarely do these people have straight up front cash, usually they want to do a profit split at the end. Which for the most part im happy with doing. I certainly prefer straight lump payment (Or per hour),mostly because it means i dont have to deal with on-going support, the upkeep of the app etc. If the application works, it works. But, Joint Ventures are often fun to do because you really get to know a true partner and see how he actually works, not just talking on forums.
However, whenever someone offers me a profit split im always dubious. What if the person cant pull through? What if the person is a slacker? What if the product isnt even marketable? People come to me with really unique ideas, but they are either ideas that are easily replicable (Meaning that there isnt much room for expansion), or they are totally out of left field and i have no idea how they would work.
When i get one of these projects, i usually ask the person for some kind of lump sum payment. As a backstopper incase the product fails, but i have still stuck in my time and effort into building this person the application. With these types of payments though, i let the person take the first X amount of profit for himself so that we are on even terms before we start splitting. At this point it is less of a Joint Venture, and me just wanting royalties on future sales. It does sound dubious if your not in my shoes, But with an application that does something you have never ever read,seen or heard of before. I have no idea how much of a market there is. Afterall im supposed to just be developing, not doing the market research.
Given that, aslong as we make something like 5 sales usually on a product, you would have made your money back on the lump payment. I would think that more people would be up for it. Unfortunately 0% of people are willing to do this. What does this tell me?
- Either im dodgy as hell and no one wants to deal with me if they have to pay me $500 upfront.
- The person has no faith in what he is doing. Doesnt believe he can make the lump sum back, and so doesnt want to enter into something where he could potentially lose money.
I usually think the latter of people. Its not that im greedy and want all the money for myself. But when someone comes to me and they want to automate a site that i have never heard of before, and all i have to go off is the persons word that there is a huge market for something like this. Its me who is put in the position of losing a week or so’s work where i could have been doing something profitable, instead of wasting my time building something for a non existant market.
I would never partner with someone, that doesnt have the believe in their product to come up with a bit of capital to get the ball rolling. Who would?
