Calculate how much I should get for an idea

niamh4626

Hello,
How do I calculate how much an idea I am selling to an established website is worth?
They are going to start writing the code for it but it is not a big job for them as they will have all the information. They are going to make a basic minimum of €500,000 per annum on the back of it.
How much is it worth?

jimmii

It depends on what it is still. An idea making nothing could be worth billions and an idea making half mill a year might be worth nothing more than what it makes. If this was a hypothetical money printing machine that would make 500k every year forever and never more or less and needed zero hours work to run I guess it would probably be worth around 20m?

If you do have something solid that has the potential to make that much I would look at some sort of licensing agreement where you get a lump sum and then an annual fee of around the sort of money you are happy to live off.

Dades

Something is only worth what someone is willing to pay for it. The more potential suitors the better, as between them a value can be found. If only one company wants you "idea", your bargaining position is limited.

Do you have something patented or some form of intellectual property? I've never heard of a basic "idea" being sold without the seller being tasked with making the idea a reality as part of the deal.

I have an "idea" I'm developing at the moment, but I'll be looking for funding to actually have it developed.

niamh4626

niamh4626 wrote: »

Hello,
How do I calculate how much an idea I am selling to an established website is worth?
They are going to start writing the code for it but it is not a big job for them as they will have all the information. They are going to make a basic minimum of €500,000 per annum on the back of it.
How much is it worth?

Make a contract with them that you get paid a percentage on the basis of revenue achieved from it at year end as a result of your idea.
The idea itself is worth nothing unless its protected in some way.

Tell me how

If you don't have a legally sound claim to the idea then I'd get suggest get all ideas of money out of your head.

Unless you own the Intellectual Property for an idea or product and have it recognized through patents then it can be very difficult/expensive to have it enforced.

The company may pay you something as a goodwill gesture but it likely will be much less than you're thinking and be a one off payment.

Stealthfins

niamh4626 wrote:

Hello, How do I calculate how much an idea I am selling to an established website is worth? They are going to start writing the code for it but it is not a big job for them as they will have all the information. They are going to make a basic minimum of €500,000 per annum on the back of it. How much is it worth?

Maybe talk to an actuary.
I came up with a few ideas during the late 90's and found an actuary was the best way to go.

Buttercake

Why cant they just copy the idea and do it themselves?

ironclaw

Buttercake wrote: »

Why cant they just copy the idea and do it themselves?

If the OP had a patent or IP on the idea, it would be tricky. But it entirely depends what the idea is. If the OP has come up with a novel way of doing something, which is doubtful, its only worth what it saves or the additional revenue it generates. For example, they think the idea is worth €500k per year, but that idea might cost €250k to implement and only save €25k per year. So it takes years to recoup the cost of doing it, neglecting the time value of money and the fact a competitor could likely copy something so trivial, eroding any value.

However, if the OP had uncovered a very novel, difficult to reproduce, chemical process that would give significant and sustained competitive advantage, the sky is the limit.

Buttercake

ironclaw wrote: »

If the OP had a patent or IP on the idea, it would be tricky.

I would be tremendously surprised is there is a patent, Anyone can easily replicate anything online and give it a different name or get someone in asia to do it for you where they have no qualms about IP

pedroeibar1

No need to get too exercised about this -
The idea is worth nothing. How could it be worth a minimum of 500k pa? How is that quantified? By whom? On what basis? What ‘value/share of that will be the OP's ‘idea’?

Everyone has ideas, what is done with them is what creates value, as said by several above. “They” are going to start writing code, it’s not a big job, blah blah. Sorry, just because OP has an idea probably means it is worth petty cash. And not even that if she has not gone down the copyright/patent protection route.

Buttercake

i hope its not a food delivery app

Water John

If the idea has any value, then it's time to involve a professional, on your behalf.

lawred2

niamh4626 wrote: »

Hello,
How do I calculate how much an idea I am selling to an established website is worth?
They are going to start writing the code for it but it is not a big job for them as they will have all the information. They are going to make a basic minimum of €500,000 per annum on the back of it.
How much is it worth?

share the idea with me - I'll make it happen and you won't be watching on as an existing operator makes money from your idea. You'll make it yourself.

ted1

What are they buying. IP rights and software are funny. They could develop functionality themselves with different code.

Could you monetise the site yourself ? How much would it cost to monetise the site?