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An acquaintance has asked me to create a Mobile Application for his business. There are two alternatives to get revenue from the application.
Get paid one time
OR
Get a certain percentage of commission from the sales of product listed in the application.
Questions:

  • Which would be the best alternative for the source of revenue.
  • What Terms And Conditions should I setup with that acquaintance?
  • Should I approach a legal consultant before discussing with that person?
  • What would be the possible legal issues that would occur after the application is delivered to the person?
  • How would I ensure that the person would pay me the promised commission?
  • Can I divert the commission amount automatically through a payment gateway into my bank account?
  • If going by the first alternative, how I can ensure that the quoted amount is paid?
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Which would be the best alternative for the source of revenue. Depends. If you don´t need money right now, and can afford to never see any pay at all, if sales are bad, then calculate:

  • OneTime pay
  • Revenue "expected sales" x "commission" x "risk-factor"

Risk factor for instance 0.5 for not having the cash instantly, you have to determine that for yourself - How likely is it that sales will be good, what other investment could you make with the money. Then, take whichever is higher.

What Terms And Conditions should I setup with that acquaintance?

Ask Lawyer

Should I approach a legal consultant before discussing with that person?

Yes, see above. When discussing, you should already have an idea what you would want and how this works legally.

What would be the possible legal issues that would occur after the application is delivered to the person?

  • Support and liability for errors in the code. (Business-applications have quite the potential to cause financial losses)
  • Cost-sharing / profit-calculations
  • Taxation.
  • ... discuss with lawyer!

How would I ensure that the person would pay me the promised commission?

Have a good contract that will stand before court and allows you insight into the revenues.

Can I divert the commission amount automatically through a payment gateway into my bank account?

I guess that will be hard to do with any standard Google/Apple app store provider, but you´d have to discuss with them.

If going by the first alternative, how I can ensure that the quoted amount is paid?

Again, good contract and clear definition of the deliverable. Negotiate milestones and get partly paid for each milestone, so you already have most of the money before the finished product is delivered. Make a official and well-documented handover at the end, where the client signs off on the delivery.

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