Over the past four years, my business partner and I founded a company that is planning on selling B2B software. We have been paying the developers to create the software, thus keeping full ownership. There have been a couple investors to keep us afloat for the time being, buying approximately 1% ownership for every $10,000 invested.
We are currently transitioning from our one developer, who was getting paid an hourly rate, to two new developers, who are working nights and weekends for ownership incentive.
Both developers are currently making right around $90K at their full time job. I was thinking that we could use an hourly rate that is somewhat equivalent to their salary rate, and then for every $10,000 worth of work, they would get 1%. Does that seem fair? If not, any ideas on how to structure it? An added benefit to the situation is that if they can get this company off the ground, both will be in position to be the lead developers of our company when this thing takes off.
The application, while functional, is in a very bad state code wise, and these two developers are putting in roughly 20 hours a week to clean everything up and getting it to an installable state. So while they aren't taking much risk at this point, they are key players in whether our company makes it or not.