1. Offer value-added features. The dinosaur image on the toes of the shoes adds value to the consumer, as it minimizes the problem of kids putting their shoes on the wrong feet. The best features add perceived value for little cost, increasing the profit per sale.
The right price-value relationship allows for a royalty between 2 and 7 percent (and even more). Since companies rarely make more than a 10 to 15 percent profit on sales, the royalty can add up to a significant percentage of sales. Companies can only afford to pay the royalty if your product can be sold at a high profit- that benefit comes from features that add value.
2. Don't jump to conclusions. There are lots of reasons (aside from the "not invented here" syndrome) why a company might overlook your product. Perhaps the company may already have more good ideas than it can introduce, or perhaps it's focusing on a different market from what the inventor has in mind. A company could also be limited in its ability to expand production, or it might have insufficient margins to pay an inventor a royalty. If a company turns you down, don't assume it doesn't like your product. There could be another reason, so don't let their lack of interest discourage you.
3. Timing is everything. Most companies will license a product under the right circumstances, which typically relate to its market position. For instance, a company might not have a product for a new application, or it may be at a market disadvantage due to a competitive product introduction. Perhaps several of its own new product ideas failed before introduction, and now it needs a new product to introduce. Maybe the company decided its product line was stagnating and needs new life from an outside source. Just because a company tells you "no" today doesn't mean it might not say "yes" in the future. So keep making those contacts, and keep approaching the same companies. Their situation will probably change, and a "no" just might become a "yes."
4. Expect a license to take much longer than you think. Most companies, like Quest Products, don't actively seek out new ideas. So if you want to license an idea, you usually need to find someone inside the company to support you, wait for that person to generate enough interest for a market feasibility study, have the engineering group review your design for safety and manufacturability, and finally negotiate a license. The entire process could take 12 to 18 months- even longer- be patient.
|First-time inventors are often overwhelmed by the complexity of marketing their ideas. One Web site worth checking out is Invention University (www.inventionuniversity.com). The site offers books, audio training and e-classes, and sells two patent software packages, Patent Hunter ($59) and Patent Wizard ($179). Two other sites are the United Inventors Association (www.uiausa.org) and Inventors' Digest magazine (www.inventorsdigest.com).|
Don Debelak is author of Entrepreneur magazine's Start-Up Guide #1813, Bringing Your Product to Market. Write to him at email@example.com.