Employee’s Idea brings in $1 Million – What the reward ?
Instead of charging the going rate of $250, we decided to charge $350. Why not? I figured we could establish ourselves as having the premium product simply by charging a premium. In the absence of additional information, consumers often use prices to judge products, and I wanted our site to be the Lexus of job listings. A few months later, 37signals raised its price to $300.
By the time you read this, that little four-week project will have made Fog Creek Software $1 million — nearly all of it profit.
That raised a question: How do you properly compensate an employee for a smash-hit, million-dollar idea? On the one hand, you could argue that you don’t have to — a software business is basically an idea factory. We were already paying Noah for his ideas. That was the nature of his employment agreement with us. Why pay twice?
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