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For many years, ACME corp has outsourced Task B to me. Over the years I've learned the ins and outs of Task A (manual labor). Together Task A + Task B = finished ACME corp product.

So now I discovered an opportunity to optimize their Task A process. But to develop a system to help ACME corp to work more efficiently, I need to put in a lot of programming work hours up front. Maybe 1-2 years to prototype, test and finally deploy, then I'll be ready to confront them with my solution. It'll take another 1 year to successfully have them switch from the old way of doing things to my new method.

So in this situation, what is the proper to way to charge? Should I just suck in everything in the beginning? Or charge them for initial development? Ultimately they will be required to pay each time they use my SaaS to complete their Task A.

Note that my SaaS is only useful for ACME corp, I don't see much use for my SaaS product to the mass market.

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up vote 3 down vote accepted

Since its only useful for the one company, you should probably put a presentation together that explains your proposal, and if they are interested, have them fund the development & continued service. I dont think you should 'up front' a project of that scale without a serious committment on their part.

Also, if appropriate, you might consider looking into patenting your idea, if there's concern they might try to implement it without you.

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Don't assume the prototyping cost

You should not assume the cost of development or prototyping. Especially since this system you are building is perhaps useful to only one company. Try to sell them on the idea and start work on it only if they commit to it (in writing).

Under this arrangement you will most likely have to install the system at the client business. If they don't want to incur the cost of maintaining the system then I guess you could host it on your end and charge monthly.

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