piclist 2000\11\08\163300a >
Thread: Licencing products
face BY : steve@spamtla.co.nz

> (All of them include one or more
> PIC micros. :-)

> Now this company wants me to sell these successful designs (and they intend
> to manufacture them themselves) and pay me some 15% of the original cost as
> a license fee. This way instead of earning 75% of total price for assembled
> product (though some work is involved) I'd get 15% for doing nothing.
> Further more I loose control over the quantity of products manufactured
> relying on their good will to pay me for the license. It doesn't look much
> advantageous :-(

If you doubt their integrity, you can offer them the service of
providing them with preprogrammed (and secured) micros at cost plus
15%. If the volume gets up you can have microchip do it for you and
they will ship the parts to the customer and a cheque to you.

If they want to buy the rights, negotiate based on what you would
earn if you continued to do it. You'll have to do some math in
advance and adjust the figures to give you an advantage. For example,
they will have told you a large potential volume to start with and
now that number will have dropped. On the other hand, if you think
hard, it probably cost you 20% more than you thought to develop it.
They also probably think that you are making a killing on the markup
but probably don't think it is as much as it really is. Pick a number
that meets their expectations but leaves you a bit of room. Also make
sure you know your absolute bottom line before you start talking.

Along a similar line, does anyone have example licensing costs for
things like RTOS's, TCP/IP stacks, etc ? I have no idea what is
commonly charged on a per unit basis for these things.

Steve Baldwin                Electronic Product Design
TLA Microsystems Ltd         Microcontroller Specialists
PO Box 15-680, New Lynn      http://www.tla.co.nz
Auckland, New Zealand        ph  +64 9 820-2221
email: spamBeGonesteveb@spam@spamspamtla.co.nz      fax +64 9 820-1929

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