> This problem only arises if the team turnover was
> under $100,000 last year {...} and this year is over $100,000

If a potential customer straddles a contractual term over time then it's a risk that would need to be assessed by the licensor ahead of executing any contract. For the licensee, it's a matter of negotiating a deal that spans the lifetime of the ongoing projects rather than on wobbly financials.

My point is simple: ALL contracts are negotiable. It's a matter of sitting down with the licensor and comming with reasonable terms for both parties. If that isn't achievable, then find another licensor.

> $100,000 profit per year is barely making wages

Sorry for nit-picking, but let's get our accounting terminology straight here. Wages are expenses which are subtracted from income to make profits. Either you mean contribution margin or shareholder dividends, but it can't be wages.

-cb

I don't see the big deal. If you're making $100,000 gross, even if 99% of that is going to costs, that means you're spending $99,000 per year on costs, and an additional $1,499 is a drop in the bucket - sure that might mean you've gone from making a $1,000 profit for the year to a $499 loss, but there's really not that much difference between the two in "real" terms.

Also, the cost of the Pro license is a one-off: you might lose $499 this year, but (assuming everything else is the same) you'll be back to $1,000 profit next year.

Quote: Original post by cbenoi1
> $100,000 profit per year is barely making wages
Sorry for nit-picking, but let's get our accounting terminology straight here. Wages are expenses which are subtracted from income to make profits. Either you mean contribution margin or shareholder dividends, but it can't be wages.

Sure, my terminology was a little imprecise.

If you have a 2 man team, and you receive $100,000 revenue, split evenly between the two of you, that is $50,000 each, which amounts to roughly $25/hour. Split between a 3 man team, and you are down to $16.50/hour.

Now, I don't know about you guys, but I find that $35/hour is the low end for Java/web/database work, and $16.50 in no way pays the rent...

Quote: Original post by JDXSolutions Ltd
I find such clauses troubling. The idea I should have to be prepared to disclose my financial records to license something seems a little odd to me. If I start using a free license are they therefore able to demand I prove my turnover?

You seem to be troubled with the part that you have to disclose your financial records, more than the fact that there's a limit between Pro vs Free version.

Well, in most agreements you don't have to disclose your records, but you do have to show your Financial statement (particularly, that clause probably is interested in your income statement) but that doesn't mean they have actual access to every transaction you've made.
These are more or less the same requisites that you would need if you would like to a take somewhat significant loan in a bank.
They may require that your statements must be audited, such auditor would need to have access to your financial records but you're then protected by professional secret.
Furthermore, some countries force some companies that meet some criteria to perform their statements and make them public.

If you hide from them the fact that you have a turnover greater than $100.000 and they found out or have a strong suspicion, then they would evaluate if they decide to sue you, come to an agreement, or watch how the situation evolves, whatever costs them less.

Oh, and IANAL
Cheers
Dark Sylinc