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I'm developing a system for Company A, the code for this system is split in to two parts. Part 1 is a general use framework that I've created and licensed to Company A without charge, Part 2 is code specific to their system, and this code belongs to them. These terms have been established in a contract. I've been happy not to charge for the use of Part 1 because I get income from their development costs.

The owner of Company A has now said "Hey we now want to set up Company B, and alter the existing code base and manage it ourselves. We will still be running Company A, which you can continue to develop for". Company B is a completely separate limited company to Company A so as it stands I do not yet have a contract with them.

As I see it, I have no direct personal gain from allowing them to use Part 1 of the code for Company B as I envisage no development income for the project. I would like to charge some sort of license fee to Company B for Part 1 of the code. Does that seem reasonable?

I do not think this is a case of anyone trying to get one over on me, I just think it hasn't been fully considered yet. So to the question...

Question

Does anyone have any tips on approaching the licensing issue with Company B? My work with Company A is still important to me so I do not want to rock the boat too hard, I just want to make sure I am compensated for the reuse of my licensed code.

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    Is it agreed by all parties that Part 1 of the code belongs to you? I appreciate Company A has not paid for this part to be developed, but do they pay any ongoing SaaS fees? If they "got this for free" it may require some delicate negotiating to charge Company B for this part. Since Company A and B are linked (by virtue of being owned by the same people) you can open out this negotiation by showing that whilst you own the rights to Part 1, you are providing Company A with a free license for as long as you are developing on Part 2.
    – halfer
    Jul 24, 2015 at 10:37
  • Of course, you could give a free Part 1 license to the new company if they ask you to develop Part 3 for them...
    – halfer
    Jul 24, 2015 at 10:40
  • (And if it is a general use framework perhaps it is not particularly worth charging for. If this is like charging for Laravel or Rails then perhaps it should be free?)
    – halfer
    Jul 24, 2015 at 10:41
  • Cheers for the response(s) halfer. Yes it is agreed it's my code (I was very specific with them about this and wanted them to understand). They don't pay ongoing fees for this. Even if development for Company A stops, I am happy for them to use it for free because this is what I originally agreed with them. I see what you're saying re: Laravel/Rails, they are definitely considerably better than what I've made, but at the same time I don't want to devalue the code I've provided them (I appreciate the irony that I'm using FOSS for pretty much the whole of their server).
    – CT14.IT
    Jul 24, 2015 at 10:52
  • Did you provide source for Part 1 or just executables? For company B, do they want to alter the existing codebase for Partt 1 or Part 2?
    – cdkMoose
    Jul 29, 2015 at 13:42

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Does anyone have any tips on approaching the licensing issue with Company B? My work with Company A is still important to me so I do not want to rock the boat too hard, I just want to make sure I am compensated for the reuse of my licensed code.

Ask yourself how long it would take a developer with your level of experience/ability to duplicate what you provide from scratch. Think about the full time salaried cost of such a person working in a 1st world nation. Your client has those numbers in mind too which is why he won't just hire someone to duplicate what you provide. Not only does he have the price in mind but the time. He probably doesn't want to have to wait 3-6 months or whatever. What you can do is offer the client 2-3 options from high price to lower price... but with lower price have more restrictive licensing than you think the client wants in a best case scenario. They may go for the lower price in the short term but longer term want to switch to the higher option. You can also make the prices say 10-20% higher than you really want to charge but offer a 10% discount to them for being long term clients. People love deals & I'm sure you love to get paid.

I do not think this is a case of anyone trying to get one over on me

Well, he may not be trying to get over on you but his priorities are different than yours. He wants to buy another mansion, sports car, put his kids in private school, go on 8 vacations a year, etc. Every $1 you give up thinking he's your friend and you can't rock the boat will go into him doing those things. Your choice.

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