Is it appropriate for a prospective client to require me to purchase third-party tools?

Question

I have been approached by a prospective client for a long-term support and development contract, but they require me to purchase roughly $4000 worth of third-party controls and tools. These were used in the initial development of the software.

Through my conversations with the client, I estimate it will take around 4 months to recoup this cost. I expressed hesitation to do this, and the client seems understanding.

My question is, since the software (as it stands) requires these tools, doesn't it make more sense that the client should purchase them? Any ideas on how best to frame this for the client?

Answer 1

My perspective here is similar to this question: Is it appropriate to include time to research if you don't know how to do something?, as both tackle the issues of who should pay for something that may only be relevant to a single project, but may also be legitimatly expected of a contractor.

In your field, are those tools standard? If I do 3D modeling for product prototype, I think it's acceptable for a client to assume I have one of a few industry standard CAD packages. If I work on the Microsoft stack, I think it's appropriate for a client to expect I use Visual Studio, or at least can interface seamlessly with developers that do.

Outside of this client, are those tools useful? Using the 3D modeling example, if a client expects me to have the same package they use internally - and there are (as I understand it, and let's just go with that for the example) a few CAD packages used industry wide - I think it's also appropriate to ask the client to cover a portion of the cost, somehow tied to how useful the package will be for other clients in the future.

Are those tools completely project specific? If this is the only project that the tools will be useful for (because they're for niche use cases, needed for legacy issues, etc) I think it's acceptable to expect the client to cover the cost, or provide the tools directly.

To your specific case, if the client seems to understand your concern about the cost it maybe worth asking why they want you to purchase the tooling, instead of providing it for you. It could be that they don't / can't license the tools easily for a contractor to use. Or it could be that they can't purchase software that is installed on systems they don't own (internal IT policy).

If for some reason it needs to be purchased by the contractor, and the tools are very project specific, I'd tell them there will be a $4000 setup fee (or similar) and that will go to the cost of purchasing and setting up the tooling. If they balk at that, you could offer to discount the first 4 months of hours (or however you're billing them), to offset some of that cost.

Answer 2

It's fully an agreement between you and the client. The client may avoid giving you personal licence because he's afraid you'd leave after a month and the costs would be too much... Or the client is considering that tool so standard, that he expect contractors to have licence for them.

As a contractor, you should calculate all costs before telling your price. $4000 is quite moderate sum, taking into account, that renting an apartment after relocation may cost you $1000 or more, and if you'd have to stay in hotel for a few months, prepare for $2000 or even more (monthly).

It's quite natural that you should expect more money if the contract conditions require from you purchasing extra software. The client should understand that, and other contractors would also require more.

In my opinion, the best solution would be for the client to provide you licence for that tools for the time of the contract. It's also not unusual for contractors to work on client's workstations. In that case no licence transfer is required.

Otherwise, I'd made it so, that the costs of software should amortize in the first period of the contract. For example, if contract is signed for 4 months (even with prolong option), I'd require $1000 more monthly. But it is still problematic in case the client reserves the option to break contract prematurely. However, if you're going to have more money, it may be worth risking.

There's no single universal solution for that case, but you should take those factors into consideration and make decision yourself.

Answer 3

If the controls and tools you are talking about are all software, then you could ask the client to provide you with a system that has these and that you can remote into. Later, when you find out that collaboration works well and that it is potentially long term, you can buy the controls and tools yourself.

Note that certain jurisdictions don't allow freelancing contracts if your work relationship resembles that of an employee (in Germany: "Scheinselbständigkeit"). However, I don't think that remoting into a machine located at the client should get you into trouble. I have freelanced on-site for several months at a large company in Germany, and colleagues have done so for years - it's nothing unusual. While I had more freedom than an employee, for example no fixed office hours, that was probably a border case. Anyhow, risk was with the client company, and it had good lawyers.

If you need special hardware, then accessing it remotely may not be a solution, or only a partial one. Special hardware could for example be a device that you need to program firmware for.

Furthermore, consider that it is normally possible to sell the controls and tools if you don't need them anymore. This does not only hold true for hardware. At least in Germany, there have been court orders requiring vendors to allow or facilitate transfer of licenses. Many do this anyhow - I suggest asking before buying.

Answer 4

Thou I mostly agree with @Lukasz Lech (sharing licence with you), there are situation where you may benefit more if you buy a licence yourself. For example, we once coded Unity3D game and had to buy some special addons. After estimation we realized that it is a good opportunity to "force yourself" to buy the licence. Later we used the same licence in multiple projects and never regret about it.

Of course, in your case $4k is quite a sum so maybe this time the client should cover these costs and if you realize you can get more project using the same licence, then you should consider buying it yourself.

Answer 5

If you're in the United States, and you bill, pay taxes, and otherwise claim to work, as an independent contractor, one of the IRS' conditions for considering you to be a contractor is that you own/buy your tools.

The penalties when a "contractor" is reclassified as an employee are more onerous to the client-reclassified-as-employer than to the worker, so your client may have a strong interest in ensuring that your business relationship will not someday be reclassified.