This is my first contract negotiation. So I've written a program which supports some hardware that the company makes. (The support is important, and most customers will buy it, but the software product is ultimately optional.) It will sell for about $2K/license and they sell 70-80 hardware systems/year. The market here is biomedical research, i.e. the customers are individual research labs in universities and hospitals. The company will be hosting the software (obviously) and it will be part of their marketing pitch. They tell me that a 75-25% split is typical. Really? How does this smell to you guys? What are numbers that you have worked with?
Edit: A little more info. I have written an open-source version of this program that has been out about a year. The contract is to write a commercialized version (basically, more features) which I would give to them. They are going to pay me some money up front, then pay me 100% of gross up to a certain amount (low six figures) and after that, 75/25% them/me in perpetuity. They will have all rights and I won't be able to build another product in that category as long as I have a relationship with them.