Some who approach us admit they already have an escrow that costs over $50K per year. Part of that cost is paid by the licensor and the rest is billed directly by the escrow agent to the licensee customers who become beneficiaries.

First of all, the price is flat out exorbitant. (Attorneys who recommend such escrows might wish to consider the reaction when their clients see the light.)

A software escrow is merely an insurance policy with a slight difference – instead of paying out cash when a triggering event occurs, the escrow agent delivers source code. If the escrow agent does not make a large cash pay out, then what is the justification for a $50K annual premium? Well, there is none, and how can you have confidence in an escrow agent who operates in that fashion.

Secondly, allowing the escrow agent to profit from your customer base by charging each of them a yearly beneficiary fee simply does not make sense. Your customer base is a garden that you have grown and tended. Why allow a stranger, the escrow agent, to reap the benefits of your labor?