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[Rico]

I'm about to send in an application for a Patent.  I have lots of questions but let me start with Consultant fees.  I'm lucky enough to have a co-worker who is a terrific designer that works with Pro-E.  I've talked with him and he's willing to help me when it gets to the point of designing the product in a way that a manufacture can make a mold and produce product.  (I want to make and sell this product myself).  The design isn't too complicated, no moving parts, made of plastic.  I want to know what a fair compensation schedule would be for this co-worker of mine.  (Keep in mind this will not be a patent through our work place and he will do the work at his home).  He's a friend so I think he will work for free in hopes of capturing future profits.  If I go that route what is a fair percentage of profits that I can offer him.  Keep in mind that this doesn't have to be too technical (definition of "profits" etc, as he trusts me and vise versa).  I would insist that he gets compensated well as I would probably never get as far as I would without him and I feel strongly about treating people fair.  Any ideas?  I was thinking 3% of profits the first year of production then 2% the second and 1% the third.  Is that way off base?  Thanks!

[supreme]

I think u shud give him 97% of profit in first year, 98 % in second year and 99% in third year.

[Penner]

Rico,

Obviously supreme wasn't very helpful.  Ultimately no one can decide on what is fair but you and your coworker. however I feel as though I can give you a few things to consider.  

First, I realize that you are friends and trust each other. However I would suggest a contract be in place before any work is done.  You may find this silly now but trust me it could save your friendship as well as some serious headaches later.

As far as consulting fees.  I'm not sure he is really a consultant, but more of a contract laborer working for future potential income.  

When devising a pay schedule  your current model leaves much to be desired.  You see you may make very little in sales your first few years and then the fourth year hit it big and he's left feeling like he got the short end of the stick.

These agreements could be structured better by say giving him a percentage of your first X dollars earned.  Thus he will likely feel assured that he was paid what he was worth.

[Richard]

Thanks.  That’s a good idea.  I was using the step amounts just to make it more appealing and to leave him with the idea that there is unlimited potential.  If I give him a percent of a set amount then I might be taking that thought away.  Maybe I can somehow combine the two to make it both appealing in a sense of an unlimited amount to a set minimum of some sort so he's sure he will get at least a certain amount.  I was also going to offer him a set dollar amount to what’s fair and reasonable to that type of service in exchange for no such scaled percentage.  This way he can make the choice of getting possibly nothing (which, lets face it is statistically overwhelming) or a smaller amount up front.  Thanks for your thoughts, I think I'm better off to make a decision now.

[ddearing]

  Supreme you are such a dick head, but I guess you heard that before.

[Access Patent Group (APG)]

hi!

4-5% is fair for your friend.

best regards,

Thien Tran

[jkudla]

hi!

thanks for your sagacious advice, Mr. Tran.