Let's Make a Deal
Licensing your idea to a bigger company can mean fewer hassles--and a lot more money in your pocket.
By Don Debelak •
Opinions expressed by Entrepreneur contributors are their own.
Would you like to profit from your idea without having to startyour own company, worry about manufacturing or handle the expensesof marketing your product? Consider licensing.
Licensing means the owner of intellectual property (a patent,trademark, copyright or trade secret) gives someone else permissionto produce the product related to that property. In return, theinventor is paid a royalty (typically 2 to 8 percent of sales). Onecompany I worked with signed a licensing agreement with theinventor of a vibrating dental scaler. Over 10 years, theinventor's 8 percent royalty amounted to more than $30 million.Not bad for an investment of $15,000 for a patent and a roughprototype.
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