Licensing Your Idea
How to Sell Your Idea to Companies
Selling invention ideas is a way to push the advancing technology and gadgetry to meet the needs of this techie-savvy generation. As such, laws for patenting, licensing, and counterfeiting is also becoming a necessity especially for inventors who are continuously churning out useful creative concepts and in demand technology. Nowadays, large companies are clamoring for the next best thing because fast innovation is the key to beating competition. This is also great for inventors, because they have the advantage of patents on their side, to ensure that their ideas would be properly credited and they will be rightfully compensated for their efforts. Indeed, inventing is becoming a great way to make money. But there are several steps that one has to take for them to successfully sell their ideas to companies. After all, this is still a business and competition is fierce among companies and inventors. You just have to know these steps so you can stay ahead of the game.
Research your market and competitors
Assuming that you already have ideas for inventions or a great invention out and already filed the proper paperwork for patenting, the next step is turning the idea into money by involving a good company. Make sure that you file a Provisional Patent Application with the United States Patent and Trademark Office, because this will grant you an entire year to look at your licensing options. The rule now is to be armed with as many facts and information as possible so you will not be cheated out of a rightful deal. One of the most important things to know is your market. You came up with the concept because you can visualize it as a necessity rather than another fancy negligible product that will just be ignored in stores. Channel your creative abilities and be very resourceful when getting to know the market. You can resort to doing focus group discussions, finding possible invention promoters for your product, and checking the popularity of similar inventions. As for the possible companies that you will be selling your product to, you can search the Internet for the company’s background and credentials and even application information for selling your invention.
It’s all in the presentation
Preparing your invention’s presentation is similar to getting ready or a job interview. You want to present your product in the best way possible, because you cannot ignore your competitors. Since this is a very competitive industry, you have to come prepared. One effective tool to bring would be a three-dimensional prototype of your invention. Even if this is not yet a working model, potential companies will have a general idea of the finished product. If this is not possible, a computer model simulation can help illustrate your invention. In addition to this, a sell sheet will be helpful to showcase the actual capabilities of your product. Include the challenge or problem that your invention aims to address, the product’s features and benefits, the target market, and the status of your invention in terms of its patent pending. These should put you on the edge in terms of product presentation. It will be up to your product’s ability to amaze your potential clients to score you a good deal.
Limit your company choices and know your criteria for choosing
After researching narrow down your choices to the companies which you feel are nearest to your invention’s category. Come up with a list of 20 to 30 of the top companies that you would want to apply your invention to a new business opportunity. Inquire via phone if they are willing to accept unsolicited invention ideas from inventors who are establishing their careers. Once you are given the positive signal, leave your name for an interview and get all possible details. Do not reveal your product’s benefits and important details just yet, because these are surprises that you would want to keep up your sleeves. It is good to not reveal your cards too quickly in the game, too, because you may have the edge of taking them aback with an amazing presentation in person.
Be the wise salesman
When you have finally finished with the presentation and are looking at a possible negotiation, you still have to make sure that you can get all the benefits about product. While you should try your best to get a high royalty and payment as possible, also remember that this is not one-shot-to-fame thing, so you have to be realistic, too. This step needs a lot of thought, because you will be signing over the rights to your invention to one company. Remember these few pointers during negotiations. An up-front payment usually covers the cost of patenting, but an agreeable sum should be based on the estimate of project sales for the first year.
One of the most important payments is the royalties, which are made based on the percentage of the licensee’s product sales. For example, a 5% royalty is equivalent to getting 5% of the wholesale price of each invention unit sold. You can get higher royalties if your invention proves to be an in-demand product in the long run. An annual minimum stands as assurance that the manufacturer will ensure promotional and marketing strategies for the product. It is typically a contractual term paid to the licensor during the launch period of the product. Finally, there is the issue of exclusivity rights. When you commit to a company, trade secret states that exclusivity rights to a product can be negotiated, as opposed to how others would make you believe that the manufacturer has to have the right to distribute the product. The next time you have great new invention ideas, take the time to invent a prototype and research the market and companies that you can sell your idea to. Don’t forget to take the necessary steps listed above to ensure that you get your money and efforts’ worth for your invention.
