Your issue is not the value of your source code, but what you can
get for it. This will depend, for example, on whether your client
paid you the full development costs, or thought they did.
In my experience, most software developers greatly overvalue their
source information (not that it *should* be more than code). Unless
your software does something worldbreakingly amazing, it's unlikely
that allowing your client to have a copy of the source code will
hurt you in any real way, simply because it will cost them a lot
more than you to maintain and enhance it. Don't underestimate the
ability of experienced software developers to match and improve your
app, either. For 99% of the software apps out there, particularly
the smaller ones, providing something as good or better is not at
all difficult. It just takes time.
Having said that, there are a number of traps. For a start, you need
to protect yourself and your copyright. If you assign the copyright
to your client, you may not be able to use the source information
yourself. If your client competes with you in the market or reduces
your sales in other ways (eg by giving your software a bad name),
you need to consider this in your price.
You may also find that you will have difficulty in selling
intellectual property (IP) rights to the source information simply
because you don't own all of the IP - often a sizable chunk of the
IP comes from the web or other sources, including shareware or
shrinkwrap components. So you may find yourself in an interesting
legal situation down the track when your client gets sued by
Note also that an NDA or similar may not be as useful as you think
it is, unless you have good oversight of what the client is doing
with it and have team of lawyers on your payroll. I've seen NDA's
blatantly violated in the interests of greed, with no real chance of
any redress to the victim, even if he knows. The legal cost are
simply too high.
But, as a rule of thumb, I would aim my price at about half of what
it would cost the *client* to develop it from scratch (note that
this may be more than what it cost you to develop), plus an amount
for potential loss of future sales. When the client laughs, explain
the business issues involved, and ask them to make an offer based on
what it's worth to them.
> Hi all,
> I have an a engineering application that performs a specific function
> for it's target industry. I've sold this application to this industry
> for over 5 years and it's considered by many to be best the it's
> I have a request from one of my customers (a large worldwide company)
> to purchase the source code so they can build customized solutions for
> their enterprise.
> I'd like feedback as to how I should value the source code. I don't
> have a clue what to table as a price for the source.
> You're help is appreciated.
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