Starting a Tech Business: A Practical Guide for Anyone Creating or Designing Applications or Software

Contracting

Getting the right contracting agreement in place is critical. A typical form will basically state that the employer owns everything developers do for them on an exclusive basis. If a developer has any pre-existing intellectual property they want to exclude, they need to identify it explicitly. Though it might sound draconian, there's no other way to do it, and most developers understand this. If your company does not own the intellectual property outright, you will have a huge liability for you and your customers even if you're using an open source model. Hence, employment and contract agreements with those terms are typical in the industry.

Then you must consider compensation. Do you do things with a fixed price based on a statement of work, or do you use an hourly rate? Recall our discussion of adaptive versus predictive development methodologies. It's like taking a cab. If you know where you're going, say from the airport to your hotel, you might ask the cab driver how much the trip will be. But if you think you might want to stop at the ATM, pick up a friend, see the sights, and so forth, then you'll need to pay the driver by the mile.

Enable Quiz has a good idea of what they want to do, but not nearly good enough for a fixed price statement of work. Also, they'll probably use an adaptive methodology, all of which suggests that they contract to pay hourly, but make sure they're getting their money's worth as they go along.