domain experts share in profit sharing

maskabun

Given a scenario of software development by small firm/an individual where consulting service is taken from a domain knowledge expert what percentage of share from profit should be given to that domain experts for his service?

TheCostumeShop.ie: Ronan

Too Vague to answer im afraid.

maskabun

Adding more information...say the domain knowledge is crucial for the software being developed and domain expert is involved from the beginning to the end of software development process.

srsly78

Most consultants work on a daily rate. Any profit share arrangement would have to be arranged beforehand.

Are you talking about sweat equity here? The consultant working for nothing but sharing in the rewards? If so compare the amount they would have made on the open market (daily rate * days worked), then compare that to the projected profits.

maskabun

srsly78 wrote: »

The consultant working for nothing but sharing in the rewards?.

Yes, this is the idea.

ontour2

Are you making a difference between a share of the profits and a share of the company?

The domain expert is required to define the solution but are they also needed to work on business planning, marketing, sales etc. If the domain expertise is required for a part of the product that is very technical but not the key value proposition then it may be understandable how they could engage for a short period of time.

The % that they would want depends on a number of factors. What is the opportunity cost for them? How exciting is your company to them? If their domain expertise is very valuable and there is limited other investment in the company they will want a bigger share. If there is a wider pool of people with similar expertise and the company has other investments of €1m then the percentage is likely to be smaller.

The stage your company is at when you try to engage the domain expert is also an important factor. Do you have product built, funding in place, other key skills hired, customers committed etc.

mneylon

Also - make sure that the "expert" actually is an expert.
It's relatively easy for someone to sell themselves as having more expertise in a specific area than they actually have when the people they're dealing with need the expertise and lack the knowledge