Browse Tag: Licensing

So, you want to license your product, eh?

We get phone calls from inventors every day – and about 60% of them say “well, I just want to license my idea. Will you buy it from me?” A majority of the time, we say no. There are a few reasons:

  1. Selling an idea isn’t as easy as it seems. Potential buyers aren’t interested in purchasing thoughts. They could hire teams of people to do that.
  2. Investors will not purchase something with no chance of return. Of course, as the inventor, you’ll have the thought process of “my product is the best”, but until an investor has seen the sales numbers, they won’t believe you.
  3. It’s difficult to license something without a prototype. Do you have a fully functioning prototype? The likeliness of an inventor selling some notes on a sheet of paper and a drawing to an investor is incredibly low.
  4. Has it been tested? Is there marketability? Will people buy this product? It’s difficult to tell unless your product has been soft-launched!

This short and sweet blog is intended to usher in some realism with new inventors. You probably won’t sell your idea unless it’s been introduced to the marketplace in some way. We suggest that you invest, yourself, into producing a small order of your product and then show investors the potential.

When you watch Shark Tank, you’ll hear the Sharks ask “how many of these have you sold so far?” Even they agree with us – buyers want to see previous milestones met before they license anything. We can help put you in the position to attract potential buyers down the road.

Interested in taking the next step? Email Nathan at Marketing@TheSourceDirect.net today and let him know you found about us on our blog!

Money and Inventing….you don’t have to be afraid of it!

One of the most common questions that we receive as an inventor support company is “will I need to pay for this?” The answer, in most cases, is yes. 

Now, don’t let that detract you. As an inventor, you absolutely need to come to the conclusion that this process will cost money. Having a fantastic idea will only get you so far.

From our experience, here are a few things we’ve heard from inventors.

I have an idea, and I want to license it.

As we’ve pointed out in other articles, licensing is hard to accomplish without a working prototype, drawings, manufacturing sourced, etc. You won’t get very far with just an idea and a heartwarming pitch. You need to show the possible licencors that they will make money if they buy your product. That’s all they’re looking to do.

If you (manufacturing company) will produce my product, I will give you a portion of the proceeds from the sales.

This is highly unlikely to work. Manufacturers are typically presented with a slew of products every year, and propositions to become business partners. It just won’t happen. Manufacturers and design companies can’t rely on your product selling so they make a profit as well as break even on the cost of production.

I’ll crowdfund to make my money!

Crowdfunding before your product is feasible is a dangerous thing to do. Most successful Kickstarter and Indiegogo Campaigns have been successful due to a professionally constructed pitch. Most products that have received funding were already prototyped, tested, and manufactured in a small-run fashion. If you only take one thing away from this article today, it should be this: never attempt crowdfunding before you have the product finished.

The best option that you have is to save your money and do it right. You could finance the product through a lender (get a loan), take out a new line of credit, ask friends and family, or even take on a small part time job. If you have the passion to get it done right, don’t let your idea fall into the wrong hands. Protect yourself, save your money (and never pay up front without getting a solid plan in place with your invention production company), and live your dreams!

Licensing: What exactly is it? Is it for me?

When developing a new product it is important to understand the dynamics of the inventing process. We see many inventors who may not understand the proper steps or path to follow to give their product the best chance for success. It is important to keep realistic goal! It is important to know exactly where you are at in development and what can be achieved in each step,  and know how much traction you can gain towards your end goal of production.

It is important not to get ahead of yourself or the stage of development you are in, this can lead to mistakes and wasted resources. One common error new inventors make often is the expectation of a license deal early in development; this is extremely rare! I know there are companies that will contact you after you file for a patent; they sell you on the idea that they will secure a deal for your concept, that there are tons of companies they can market your product to that will take your idea do all the work, pay for everything, and all you have to do is collect a check.

This simply is not true; it is one in a million. It has been our experience that a product has to be brought through many stages of development before a company will even take a look at giving a licensing deal. Usually proven product sales are needed in order for this to happen; meaning you have spent money on the proper steps to get there, by then it may or may not be beneficial for you to take a licensing deal. You only get a small percentage of the sales.

Definition of LICENSING: Licensing means renting or leasing of an intangible asset. It is a process of creating and managing contracts between the owner of a brand and a company or individual who wants to use the brand in association with a product, for an agreed period of time, within an agreed territory.

Your best option may be manufacturing it yourself – do you really want someone else profiting on your idea?  Don’t be a victim of low-cost licensing deals. It may be the biggest mistake of your inventing career.