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No Developers Shouldn’t Be Paid Royalties

Posted by Keith Elder | Posted in Programming | Posted on 22-05-2008

Dave Donaldson posted an article asking if developers should be paid royalties.  He gives an example of a developer who builds a system for a call center that increases sales.  Should the developer get a percentage of the sales as a royalty?  Here’s my words of wisdom on this subject.

As a Developer

It is easy to say, “Yes, pay me a royalty for my work”.  That would be great as a developer but it also wouldn’t be fair since the employer or business if you are consulting has already paid you to perform that service.  The ONLY case where I could see a business agreeing to a royalty is if you the developer built that software for free, and then simply charged a transaction fee.  I equate this to how credit cards work.  American Express takes 3% off the top of all credit card transactions.  That’s 3% of EVERY transaction run through American Express.  Have you ever wondered why not all businesses carry Amex?  Now you know.  It is expensive.  Of course Amex rates are adjusted based on volume but 3% is what business owners have to pay.  They pay that for their customers who want to use the card because they make more sales, thus they don’t mind paying the 3%.  Ask yourself this.  Would you rather have 0% of a profit or 3% less?  The business owner is paying a few to use the credit card system.  Similarly, if a software developer was to create a software program and not charge for it and also not be paid to write the software, then sure, build in a royalty.  I actually know some developers that have done this.

As a Business

As a business owner I would say, “Hell no I’m not paying you a royalty, I already paid you for your services!”.  When a business pays you for your time, you are getting paid to provide a service.  Just because it is technical doesn’t mean a business owner should treat it any different than any other service.  For example, should the company that sent out the mailings for an advertisement get a royalty for their service since they increased sales?  No.  They were paid for a service and that is that. 

We as developers want to put ourselves on a high and mighty post a lot of the time.  At the end of the day the work we do for a business is looked at no different than an electrician who wired the data center.  Should the electrician get paid a royalty as well because the server he is powering took another order from the web site?  The electrician could argue that without him putting in the electricity you could never take that order.  Which is funny because our software can’t even work without electricity!  The electrician trumps us anyway we turn as a developer.  What about the telephone company?  If you are a developer consultant should you pay a royalty to your cell phone provider because you just landed a deal using their phone network?  No!  If we have the mentality of every time we do something we should get paid a royalty on it the only thing that will happen is we will wind up owing someone else a royalty for something else.  It will never end.

Bottom line.  Go to work, provide a service, move on.  If you want to get paid a royalty, don’t charge for your software nor your time.

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