From the December 1997 issue of Entrepreneur

You've got this great idea, but you don't know how to take it forward. You haven't the foggiest notion how to evaluate your idea, research the market or build a prototype. Well, an industry has cropped up to help you with this dilemma: product development companies.

Although the two are sometimes confused, product development companies and invention development companies are not the same. When you thumb through the backs of many magazines, you'll see advertisements for invention development companies or invention marketing companies. The ads offer a quick and easy way to get your idea to market for an upfront fee. These companies offer such services as a patent search, marketing reports, development and distribution contacts, and more. The services are all done for a variety of fees and for a percentage of profits from your idea. The companies' sales approach is usually high-pressure. They will flatter you by telling you how great your idea is and appeal to your sense of guilt for not having what it takes to develop it.

More than a year ago, I had one of my employees contact five of these companies that we randomly chose from the backs of magazines. She submitted a product idea I had already received a patent on and had even advertised on television. All five companies responded. Each gushed over the idea, saying it was fantastic, and each claimed to have done a preliminary investigation that showed the idea was patentable.

All the companies offered to do a patent search and an initial patent filing for fees ranging from $500 to $5,000 upfront. One company gave her a quote of $10,000 and 20 percent of future profits to "develop" the idea. The companies could not tell us what type of patent would be filed (design or utility), and all five were vague about what she would receive. My employee was aggressively and frequently called in the evenings by all the companies. When she finally asked for details in writing, her request was denied, and the phone solicitation stopped.

Both CNN and "48 Hours" have done reports on invention development companies. Both advised their viewers to steer clear of these companies, and so do I. Sen. Joseph I. Lieberman (D-CT) has introduced legislation that would conceivably wipe out these types of companies. The act is titled The 1995 Inventors Protection Act. His office estimates that about 25,000 inventors are conned by these companies each year to the tune of tens of millions of dollars.

By stark contrast, a product development company is a full-service solution to your prototype needs. These companies provide assistance in areas such as prototyping, marketing, finance, legal protection, manufacturing and packaging. The level of service may differ from one firm to another, but most offer some combination of the above. Product development firms take more of a whole-product view than do typical prototype makers. Their goal is to give your idea the best chance for success in the market. Without an aggressive sales force, they develop a proposal tailored to you and your idea and clearly state their fees upfront. These companies are end-result driven and give a lot of thought to the needs of the consumer who will buy your product.


Tomima Edmark is the inventor of the TopsyTail and several other products and is author of The American Dream Fact Pack ($49.95), available by calling (800) 558-6779. Questions regarding inventions and patents may be sent to "Bright Ideas," Entrepreneur, 2392 Morse Ave., Irvine, CA 92614.

To Market, To Market

One of the services a product development company can provide you with is obtaining market information. This information may help determine whether there is a market for your idea, and if there is a market, these companies can define it for you. They may also help you expand your idea into markets you may not have considered. They can help develop effective packaging, estimate the demand for your product and give advice on how to price your product.

The financial advice they provide may include tips on financing your idea and help with finding a business partner or licensee. Legal assistance may include patent searches and patent filings, gaining necessary government or industry approvals (Food and Drug Administration, Underwriters Laboratories, Federal Communication Commission and so on) to ensure your product meets safety requirements.

Manufacturing assistance provided by these companies can include designing your product to manufacturing specifications, preparing your product for manufacturing, and referring you to manufacturing firms. This assistance works hand in hand with the prototype development process.

The product development firm will work toward building a prototype that can be affordably manufactured. To do this, it might want to know how many units you plan to make in your initial manufacturing run and what you want the retail price to be. Using this information, it will have a prototype built out of a material that simulates as closely as possible the eventual materials used for manufacturing. For example, a final product made out of polyethylene or polypropylene will have a prototype made of urethane.

One product development company is T-2 Design Corp. in Santa Monica, California. President Paul Berman, whose company has specialized in industrial design and prototyping for the past 13 years, explains how they work: "We evaluate and research the idea, including patent searching, before we move on to the essential stage of designing a prototype," Berman says. "The raw idea is styled and designed into a functioning prototype, including any new mechanisms or electronics to make it viable."

Now for the bad news: Hiring a product development company can be expensive. Berman charges $60 for an initial consultation, during which the product is discussed and future actions are identified. Reputable product development companies will give you an honest evaluation in a consultation and tell you if they think your idea has any merit.

Generally, the next step is a patent search. T-2 charges $325 for a manual patent search. This means an individual actually goes to the U.S. Patent and Trademark Office in Washington, DC, and hand-searches through the patent repository library. When the search results are in, T-2 contacts a patent attorney who will review the search results and provide a $50 written opinion on the patentability of the idea.

If you decide to have a product development company design and build your prototype, be aware that the cost will vary depending on your idea. T-2 charges $60 per hour. Berman estimates the cost of designing and building a prototype to be anywhere from $1,000 to $14,000, depending on the complexity of the product. For prototypes with simple electronics, the starting point is approximately $3,500. Sophisticated electronic prototypes usually start at around $7,000.

After you choke on their quote for performing all the services you require, sit down and think about how much it would cost you in time and money to do it yourself, and consider the expertise they have that you don't. You may find the company is worth its fee when you consider it will reduce potentially costly mistakes, get your idea to market more quickly and provide expertise you could not find elsewhere.

Starting Your Search

Finding a product development company is relatively easy; check the Yellow Pages under "product development" and "marketing." You may also be able to find a product development company through referrals from family, friends and business contacts.

Don't be afraid to call a small company with a product similar to your own idea and ask to speak to the inventor. Many times, he or she will be more than happy to assist you. If the inventor didn't use a product development company, there is a good chance he or she knows of someone who has.

Product development companies are very helpful when your idea is complex. One of the primary functions of a product development company is to help you figure out how to get your product made out of suitable materials within a profitable cost structure. Also, if you are faced with many manufacturing alternatives, these companies can help you narrow the list. Of course, when deciding whether to use a product development company, you must weigh the benefits against the costs.

Contact Sources

T-2 Design Corp., (310) 656-9922, http://members.aol.com/t2design

Sen. Joseph Lieberman, Senate Hart Office Bldg., Washington, DC 20510, http://www.senate.gov/member/ct/lieberman/general