[patio11]

We get IP ownership, but we don’t bill for our time at all. Instead they become our first customer to use the new tool for a lower yearly fee (including maintenance).

You're taking on market and execution risk here, for which you are not receiving compensation. (Presumably you set your consulting rates high enough such that engagements are a win for you. The SaaSification option is at a discount to your rate, which you only make up if you sell it to other people. "Selling it to other people" is often much, much more difficult than writing working software.)

Any consultants in the room who happen to have an engagement which would create usable IP could consider the following alternative: "You pay our normal rates, and you pay for hosting/maintenance, and we own all the IP." This is actually very common, because most customers of software do not want to get into the software business and hence they don't give a fig nutton about commercial exploitation of this system they want to buy from you. No purchasing manager at the US federal government is going to nail his promotion to GSWhatever if he preserves the government's call option on starting a SaaS starttup.

[tumba]

This is a common scenario for me. My contract generally includes the following provision.

"Client shall have a perpetual, irrevocable, nontransferable license to use and copy the materials and deliverables created, discovered, invented, developed or prepared in the course of this agreement (“Deliverables”) and prepare derivative works based on the Deliverables for its internal use. All other rights in the Deliverables remain in and/or are assigned to Consultant."

[lifeisstillgood]

Thank you - going to get that UK-law-ified and stick it all over the place

Cheers !

[mynegation]

While this certainly happens, there are companies that do not want their codified knowledge to leak to competitors. So they lock down the IP not because they want to sell it, but just in case code happens to contain trade secrets.

[jguimont]

My terms of service account for that. You need to separate the business specific from the underlying technology in different deliverables and keep the IP for the underlying technologies yours.

I tend to reuse a lot of code from previous projects in new ones, so this is essential.

[djt]

That is true, but would cost orders of magnitude more to do that.

[unreal37]

Agreed. I've worked at a company that owned the IP to a CRM-type system fully bought and paid for by a major car maker. The car maker paid my employer millions to develop the system over several years, and then willingly gave up the IP for it at the end of the process.

My employer was then able to go and sell other similar businesses on the same software. It's surprising, but common.

[john_w_t_b]

This is a common arrangement for consultants in the ERP sector. It's a nice way to start a software business. Your customers provide you with seed capital, user requirements and a reference site. I've seen a couple of people start multi-million dollar businesses with this approach.

[ams6110]

It can work particularly well for public sector customers, because they generally are not worried about "trade secrets" or other IP being later sold to a competitor.