The Two Paths To Invention Profits

One of the most significant things any successful inventor must understand is that, above all else, the primary objective with their invention is profitable sales of product, hopefully on a large scale. Obviously, this type of thinking goes well beyond merely understanding the proposed workings of their new invention.

Now, many of you clever inventors reading this may think that you already understand this, all the while focusing the bulk of your energy and efforts toward something else (tinkering with a prototype, premature patent filings, etc.).

The most perfectly crafted and tested prototypes are rendered useless if no one knows that they even exist.

Patents on inventions that are never commercialized are a huge waste of time and money. This is a simple fact but a very important one!

An inventor has fairly limited choices in terms of how to try and make profit from their intellectual property. Though the road may weave and wind along in unpredictable ways, there remains only two basic models by which an inventor profits from their invention.

The Two Paths To Invention Profits are:

A) VENTURING: Form a business around the product or invention (the "property", in IP speak, is the business' capital asset); You manufacture and market it yourself.

Upside: if the invention is a hit, you make all the money. Downside: if the invention flops, you lose all the money.

B) LICENSING: Secure a licensing agreement from another company that can more rapidly or widely market the product in exchange for a royalty.

Upside: licensees will be able to move quickly and on a larger scale than you. Financial risks assumed by licensee. Downside: success is entirely dependent of effectiveness of licensee. Bulk of profits go to licensee.

Keeping yourself focused on the particular needs and requirements of these two very different business models will help you advance your invention in the appropriate direction most efficiently.

Realize that what works great for one may be a complete waste of time for the other. Time and dollars are ALWAYS in short supply, so you must be judicious and investing yours in wild goose chases and dead-ends.

Consider, in your dream scenario, what path you want to take with your invention, make it or license it, and then put your full undivided attention on the important factors involved. Focus, action.

Bear in mind, manufacturing a product requires careful cost considerations and involves significant distribution challenges.

On the other hand, product licensing opportunities involve fitting a new invention into existing marketing and distribution channels for a company - a very different set of priorities.



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