My company is engaged in a trading signal analysis effort with a fund management company. We provide quantitative methods to analyze stock data and recommend trading strategies, which will be bundled with their fund management platform system. We make profits by taking a portion of the subscription fees of the customers owned by their company. There are a few ways to make a contract for the effort:
(a) cash-only deal in which we develop the software product and deliver it for good. We charge the development costs at the market rates.
(b) Profit only from the prospect subscription fee. The pro is that it may have massive customer subscriptions, while the con is, if the integration does not happen for some reason beyond our control, our effort is voided.
(c) a mix of (a) and (b) where we trade a lower-than-market-rate development compensation for a portion of the subscription revenue in the future.
Please share your thoughts. If the other company insists on (b), how to negotiate?
Think of it in other terms - those Akamai/etc contract points are based on expected minimum revenue generation. You're extending them a courtesy price ( x% discount over "published rates" ) and/or professional services ( integration , customization , metered support , etc ) in exchange for their commitment to future revenue. Through this partnership, you expect to make $x as a minimum, per month, over x months. It's up to them where they generate the revenue for paying you the minimum fees -- usage of your product, resale, subscription fees, or other methods. You should be able to work with them to phrase it into something that looks good on both your balance sheets and theirs.