We didn't have a well defined contract. I made the first program to his specifications, but I added a few of my own specs and features for him while I was at it. He has the source code to the first program, but there originally was no discussion over who owns it. It's really a young niche that this program fills, so there was a lot of room for improvement on the first program.

It was a type of program that was in demand, so over time I made this program for several different people (all for personal use and without souce code, except for the first guy) as a custom program built to their specifications. Each time, I added features and redesigned sections of code, and almost every line has been rewritten since the first program was built. Probably less than 5% of the current code matches the original.

I don't think there's any disagreement over who owns the current code of the new version, which should be me. Although he has mentioned he has filed patents on certain aspects of the original program (I don't know which aspects or even if these patents have been approved). There are several other programs on the net that do basically the same as this one though. This one just does it better and easier.

Really I didn't anticipate the popularity of this program, or else I would have made a better deal to begin with to share in the action. He says he will personally profit about 15% of the income on the new version of the program. But like Mark said, many expenses are fixed and I'm sure their cost will go down over time. He doesn't seem to want to budge over 20%, and he knows I was seriously considering selling it on my own or somewhere else. He says the most profitable strategy is to keep the percents low and the sales high. He's been a good guy to work with, and I think he's honest, plus his site will generate more sales than any other site that caters to this niche.

I just wanted to make sure I'm not getting ripped off. I think for now, I'll take the offer with the option of discontinuing the deal at any time in the future, so if the expenses start going down without my share going up then I can take it elsewhere.

Also, I don't want to say the name of the program until concrete deals have been made. Thanks for all the advice so far, guys.