Ask HN: How much should I charge for building a website for this startup?
3 comments
Just an old guy's ramblings:
To percentages, I say take the cash and apply it to your college, or your own startup. Charge them in blocks of hours, and they pay up front for each block. If they can't pay now, they won't want to pay you if the money starts rolling in. Figure $120/hour in 10 or 20 hour blocks, depending on development needs.
To me, the "they had a difficult time finding someone" is a red flag. You should be in a position to fire them as a client without a messy breakup.
If you are considered a part of the startup, make sure you are not putting yourself in an actionable position. If it goes belly up there will be a reckoning in terms of unpaid bills, and the people they owe will go after everyone.
Again...just ramblings. I'm sure others will be a bit more cheery about it :)
To percentages, I say take the cash and apply it to your college, or your own startup. Charge them in blocks of hours, and they pay up front for each block. If they can't pay now, they won't want to pay you if the money starts rolling in. Figure $120/hour in 10 or 20 hour blocks, depending on development needs.
To me, the "they had a difficult time finding someone" is a red flag. You should be in a position to fire them as a client without a messy breakup.
If you are considered a part of the startup, make sure you are not putting yourself in an actionable position. If it goes belly up there will be a reckoning in terms of unpaid bills, and the people they owe will go after everyone.
Again...just ramblings. I'm sure others will be a bit more cheery about it :)
Thanks for the advice! I'll keep it in mind
45% of profits, may or may not be good. Off the top of my head, they will have...
* hosting costs (and everything that goes with that)
* payroll & benefits (are they paying themselves?)
* taxes (the rate they are taxed is dependent on the state they incorporated in and the type of corporation they are incorporated as (Sole Proprietor, LLC, S or C Corp))
* misc.
It could turn out that they don't run a profit, yet still generate revenue. If you feel that it has legs, you may want to ask for a percentage of the company. This would make you an employ and would allow you in the future the potential to receive dividends on profit. This is taxed at 15% instead of normal personal income tax rates. (obviously i'm looking at this from the USA point of view.)
Just my $0.02
edited stuff
* hosting costs (and everything that goes with that)
* payroll & benefits (are they paying themselves?)
* taxes (the rate they are taxed is dependent on the state they incorporated in and the type of corporation they are incorporated as (Sole Proprietor, LLC, S or C Corp))
* misc.
It could turn out that they don't run a profit, yet still generate revenue. If you feel that it has legs, you may want to ask for a percentage of the company. This would make you an employ and would allow you in the future the potential to receive dividends on profit. This is taxed at 15% instead of normal personal income tax rates. (obviously i'm looking at this from the USA point of view.)
Just my $0.02
edited stuff
OP here. I'm considering the following. 45% of revenue while I'm with the company and maintaining the site. If I leave, I get 20% of profits for 3 years or while my code base is being used, whichever is shorter. How does that sound?
I am a student in college. I was recruited by a group of business major friends to build a website for a notes-sharing web-business they are creating. The problem is, I'm not sure what is considered reasonable payment. Currently, the group of creators have been speaking to me as if I'm in their inner circle of founding members. I'm not sure that's the best though.
I'm meeting with the two guys who are in charge (the CEOs I guess, though they don't call themselves that) of the business in 80 minutes to finalize what I'm getting. Something to keep in mind: there's a good chance the company won't take off, but I can see it as very possible for them to rake in several hundred or even thousands of dollars at first. Some things I need to decide are
* Should I ask for a large percentage of first year profits, a smaller percentage of all profits made using my site, or a flat rate?
* How much should I charge?
* Should I consider myself a part of the company, or not?
* Who owns the code, them or me?
I spoke to them briefly about this before and we were kind of hovering around 45% of the income made during the first year. I thought this was reasonable, but I am inexperienced. When I mentioned this to my parents as a side remark on the phone, they instantly became angry and said I was selling too low. According to their view, I should be making 45% of all profits indefinitely while the site I made is being used. They have a lot more business experience than I do, although not with startups and webdev.
What do you think is a reasonable offer? I think it's important to note I have a bargaining advantage because they had a difficult time finding someone who they thought was a competent webdeveloper and they would have a difficult time replacing me