P:
Prototyping
After you've done your market research and determined the
originality of your idea, you'll want to prototype it. The most
obvious reason for creating a prototype is to have something to
present and demonstrate to potential licensees and buyers. Gibbs
notes these prototype purposes as well: 1) to prove the design or
size of your invention; 2) idea "reduction to practice,"
which will complement your journal; and 3) to discover more
patentable details of your invention before you file your
application.
If you can get a prototype made in a way that creates a
"looks-like-works-like" version of your product in a
small quantity, that's even better. "There are two huge
advantages to having multiple 'product quality' prototypes:
You can have multiple people looking at them and not worry much if
one gets broken or doesn't come back, and you can put some on
the market for sale for real and see what actually happens when
buyers have the opportunity to purchase," says White, adding
that the provisional application for patent should be filed before
this test marketing. "So what if selling prototypes loses
money at retail prices? Actual proof that the product will sell
before spending large amounts on production tooling substantially
reduces the risks of such a costly decision."
When you're looking for a prototyper, you'll go about it
in much the same way as looking for a manufacturer: lots of
networking with similar professionals, looking on PatentCafe.com or
in Inventor's Digest ads, or searching under headings
like "designers, industrial" and "engineer, product
development" in the Yellow Pages.
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Before you contact them, you'll want to have a solid idea of
what you need. "I prototyped for several years, and people
would come to me with lunch-bag and napkin sketches or, even worse,
just a verbal idea," says Lander. "Get a draftsperson to
make drawings. They don't have to be real fancy, but they
should have all the dimensions. It's a lot cheaper to erase a
number on paper than it is to try to repair something that's
already in metal or plastic."
Q: QVC &
HSN
QVC and HSN are two coveted
outlets for inventors. HSN alone featured 25,000 new products in
2001, and QVC hosts a National Product Search (the last one was
held April 26-28 at the Mall of America). Visit their Web sites and
search for vendor information for further details.
R: Royalties
This is what you get--usually a percentage of their sales
(not retail)--from your licensees. That's a simple
definition for a very important figure that could make or break
your invention. First, a piece of advice: Understand your industry
norms for royalty fees, because if you blanche at the figure they
offer you without understanding the reasoning behind it, you may
appear not only greedy, but uninformed and unprofessional as
well.
Second, figure the manufacturing costs before you ever
start the patent process. (See
X for more details.) If it's so much that neither you nor
your manufacturer will turn a decent profit or so much that
you'll be overpriced compared to your competition, you'll
need to either reassess your manufacturing process to try to cut
costs or just go back to the drawing board.
Once you know how much your product will cost to make, use this
handy formula (courtesy of Gibbs) to figure prices: Multiply the
production costs by 4.5 for products sold through retailers. For
commercial products, multiply it by 3.5. If this price is
competitive, start looking for licensees. The more profitable your
invention, the more leverage you have in royalty negotiations. (For
a more detailed explanation, read this article on PatentCafe.com.)
And finally, note this piece of advice: "An inventor must
always be careful to get some kind of guarantee for a minimum
[royalty] so the licensee can't simply tie up the invention and
never do anything with it," says Lander. "There has to be
an incentive for them to actually do something with it. Or if they
want to leave it on the back burner, they at least have to pay the
inventor a minimum annual figure."
S: Sales
Outlets
You're a brand-new inventor and you want to become a Wal-Mart
vendor? Good luck, because you've got a rough path ahead of
you. Mass retailers are often loathe to add one-line companies to
their vendor roster because it costs them more money to do business
with you and you have yet to prove yourself a reliable supplier. It
can happen, but you have a much better chance at building
your brand by focusing on smaller, local retailers and catalogs.
(Try Google's catalog search here.)
http://catalogs.google.com/
A warning: "Catalogs usually have the advantage of not
initially requiring retail-quality packaging, but there is often a
substantial delay in getting into their publication cycle,"
says White. "Independent local stores will often be delighted
to take on a local's product--on consignment, meaning they pay
you only after the product sells. If the product starts getting
repeat orders and other stores start asking for it, then it's
almost certain that the big box stores will eventually come
knocking."
T: Trade
Shows
For new inventors, attending a trade show will be a lot more
beneficial than trying to be a vendor at one. "Industry shows
are essential," says Hayes-Rines. "As an attendee, you
can pick up business cards of sales managers. As a vendor, it's
tough. These shows are usually high-priced, and you must have
product. Invention shows offer lots of opportunities--some market
testing, learning from others [through networking], and learning
how to present yourself at a trade show. It's not as easy as it
looks."
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