How Should You Pay For Software Development?

If you’re planning to pay for a software developer to create an app for you, how should you pay for it?

This is an important question because structuring the development contract the wrong way can cost you a fortune without even getting the app you paid for.

Ideally, the software development agreement should provide that you pay a fixed price for at least the minimum viable product (MVP) version. And that fixed price is split out into multiple payments made as certain milestones are achieved during the dev process.

It’s dangerous to pay for app development on a time and materials basis if there are no caps, deadlines, milestones, or other restrictions on the developer. In essence, you’re trusting someone to not overcharge you and to actually deliver as promised. And by the time you discover the developer is incompetent, inexperienced, or corrupt, you’ve paid out a lot with little or nothing in return.

Sometimes it makes sense to take a hybrid approach. For example, a fixed price for the MVP version of the app to be developed. And then certain improvements done on a time and materials basis.

Regardless of which method you pick, never pay all or most of a software developer’s fee up front. Chances are you’ll never get the app and there won’t be a refund either.

An experienced software lawyer can prepare an app development contract that’s designed to protect you from these and other dangers (loss of code ownership, your developer competing against you, etc.).

What if the developer insists on using his contract? Have a software attorney review it before you sign so that issues can be resolved now rather than cleaning up an expensive mess later.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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