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Written by : Dario Greenough
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Thanks for this great article
Thanks for your comment Tristan Postlewaite, have a nice day.
- Dario Greenough, Staff Member
so making money off of your invention involves a strategy of value creation finding someone who is interested in what you're doing someone who sees enough value in what you're doing that they want to pay for it right so um critical thing in all entrepreneurship is exchange of value creation of value and so there's different ways though to approach this there's different ways to approach creating value from your invention such that other people are willing to pay for it of course that money can come from customers direct customers of your invention that are buying products so that's one way and another way is through people who themselves uh see a way to um to profit from it so it's it's an added step it's where you have a company an entity that believes that they would be able to create value in the world using your invention in other words they'll be able to sell products if they had access to your invention or if they have the rights to use your invention so this is where the the paths are the different the different business models begin to deviate um there are paths toward toward making money with your invention that involve creating products and there are paths that are really most involved in in conveying the intellectual property and conveying the rights you have to your invention so it's more of a kind of like thought work where the the work comes from the um the thoughts that you have in terms of of of the invention itself the um the work involved is in protecting it and making sure that you position it in a way that all the people can see value but it's not in actually manufacturing it's not an actually design and in distribution of products and that i think is the biggest question that most inventors should ask themselves is where they sit on the question of do i want to actually get involved in manufacturing products do i want to get involved in in designing products prototyping them testing them you know finding the components getting them assembled packaging and then promoting it finding either retail channels that are interested in in buying the product to sell in their stores or or creating online sales through e-commerce and so you really want to ask yourself do you want to get involved in that because that is definitely for some people some people enjoy the hell out of of selling products making something putting it out there watching the needle move as the sales increase and then there are other people that don't want to get involved in that and you know one thing to consider about it is i mean all of this is relationship oriented right whether you're going to sell your products or sell the rights to your product it's all about people it's all about relationships it's all about making contact with people that see the value understand the message understand what you're creating with your product and are willing to pay for it so it is all about relationships but i would say that manufacturing and selling is a bit more relationship heavy there's more people that you need to get involved in the project there's more people that need to be in some type of cooperative relationship or joint venture with you in order to get product sales off the ground so it also means capital a lot of times with manufacturing it takes significant capital to get the product produced to get it distributed to advertise the product to market the product so that's something you want to ask too so it is a bit about personality it is a bit about resources but um you know i i think that the biggest question is does it light you up is it something that gets you excited um there's the notion of going into business making this product does that excite you and then that might be the path toward toward making money from this invention on the other hand if it doesn't if you really can't see yourself getting involved in manufacturing the product then the other major direction is to find someone who is find someone who um sees what you have in mind doing buys into the vision sees like how it could help their own business perhaps like usually the the the other person that you're looking to get excited about the invention is a company that's already in the field of the invention a company that's already involved in manufacturing products like this and by uh you know by tapping into that network or tapping into their resources tapping into their ability to get a product out there um it it then becomes an advantage for you having your success and it really is about them seeing hey this is something great this is something that i would love to have as part of my product line this is something that could help our business grow and of course they have access to the resources to make it happen they have the distribution network already set up they have the customers already existing so so then the path then towards making money from your invention is finding that person finding that person who's in a position to both appreciate what a great idea it is because they're in the business and they're in a position to make it happen and once you do locate that person it becomes a matter of it becomes a a matter of what type of deal fits now a lot of times people think in terms of selling their rights outright in other words people think about the notion of someone coming along and buying their patent and that happens sometimes but let's just take a look at that for a moment so if you're able to sell your invention outright if you're able to sell your invention you have a company that's interested in buying you a patent then um they buy the patent they pay you you've gotten paid you're no longer involved in the process you don't have a stake in the outcome of the product anymore so if the product from that point fails well you've gotten paid already and it doesn't matter so much because again you've already gotten paid um if instead the product does extremely well like you it's a runaway success well beyond any expectations then if you sold the rights you're not going to get to enjoy that success you've already gotten paid so if the product does a hundred times the sales that anyone imagined you're not going to get to enjoy in that success so that's the downside of selling the rights um you know to the patent to selling it outright um the other or more common path is for the invention to be licensed in other words for a company to say hey this is great we'd like to do this so we'd like to pay you for every unit that we produce and that's called a licensing agreement and the payment that they make for every unit produced is called a royalty payment and what happens there is essentially you're sharing the risk with the company you're sharing the risk in that if they make lots of products you're going to get paid a lot if they make some products and it doesn't sell very well you're only going to get paid a little and then they might discontinue the product so you're sharing the risk with the company of how the product does of whether it succeeds or not now interesting thing about licensing agreements and considering that that you know the product once you license the produ
Thanks dualistisC your participation is very much appreciated
- Dario Greenough
About the author
I've studied management cybernetics at Barclay College in Haviland and I am an expert in dramaturgical sociology. I usually feel not specified. My previous job was mining engineer I held this position for 13 years, I love talking about jogging and mountaineering. Huge fan of Sarah Jessica Parker I practice equestrian: eventing and collect postmarks.
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