

Terms with Outsourced development team - pharshavat

I am starting a project where I am getting an offshore software company to develop my beta product. Even though I have a technical co-founder, but we are both involved with getting a beta client so thought would outsource the low level programming. We are going to develop the high level workflows and let them code the application. I am looking for advice on how I can come up creative ways to pay the offshore team. Some ideas that I have:
1) Come up with the number of hours/man months its going to take to develop the initial release and put a dollar value to it. So lets say its going to take 100 hours to develop the initial product and we put $10/hr, so makes it $1000 total. Instead of offering equity, I want to offer that once we make money or raise capital, we will give them $1500 back for the risk that they are taking. 
2) Offer some sort of equity with a buyback option.
Are there any other creative ways that any of you have used?
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poppysan
I know you are outsourcing the low-level coding, but if I were you, I'd look
for slightly more senior guys. 10/hr comes with a lot of hiccups in my
experience. But maybe you guys are willing to put a little more management
time into the project for the discount. Either way its a give and take. Good
luck!

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pharshavat
Thanks! Actually I was just using arbitrary numbers to show the calculation
and make it easier to understand. I am sure the costs are going to be way
higher since we are trying to partner with not a top firm, but a mid-tier
company that has done projects in the past.

