valueof a concept?

I’m curious as to how to put a value on a concept for new products. My mind set is has always been around actual time invested and hard costs, but that isn’t relative to what the potential may be. I know there there are a few on here that have worked on R&D and sold their idea. Mind sharing how to put a reasonable value to it? I’ve heard piece rate based on a 3 year projection is not out of line, but even that isn’t easy to predict.

There are a few factors to consider like: Would you produce it or license it to a manufacturer? Do you want to sell the idea and part ways or do you want to retain at least partial control? IS it something that can be produced with existing equipment or does it require new start-up? Do you own the patent?

I invented a product. I knew a manufacturer that could produce it with their equipment. I chose to license it to them and I get a percentage of gross $ sold, not net (big difference wit ha new product). I also retain sales ability and get an additional percentage on units that I sell. This relationship allows me to be as active or inactive as I choose. Another value that I found is that the established company already has the sales, marketing, bookwork,and shipping in place.

Value is what you can get but it is generally a small percentage. Negotiate an increase in percentage with an increase in units sold. You could have a ton of time invested in the idea or you could have just pulled it out of your hind-end. I don’t know if that ultimately makes any difference to the end value.

I would also work on having a working prototype. In my opinion this will raise the value with any potential clients or buyers. Ultimately, it is what every you can sell it for. If it is purely a concept, you might want to look into what a intellectual properties lawyer. Ask them how to best protect yourself and you idea.

Francis

I don’t know how you could formulate a value of a concept. The value of any product is production cost vs selling price vs demand. Any product going to market must have a very strong sales base behind it. You need sales people, literature produced, display racks produced ect. ect. On the business side you need a company that can protect your idea with patents, lawyers , liability insurance ect. In today’s world almost everything goes to China to be manufactured so you need a company that can get that done. Watch the TV show Shark Tank on Friday nights on ABC. They tear apart many idea’s and concepts that people have developed.

Not knowing your product I would offer this question. Would you rather have the power of Rapala’s company behind a product or the guy who did the Flying Lure? The development and manufacturing cost of a Rapala stick bait that sells hundreds of thousands every year vs a 100,000 Flying Lures is gigantic. The staying power of Rapala is huge and thats where the real money is.

Try and get a deal where you get paid a per piece price with a escalating percentage. (the post above nailed it perfectly) Guys who sit in the basement and tinker and build things generally need to go long term to get paid for the concept. It’s that or take a quick (low) amount up front for the idea and just move on.

Now this is an interesting post . I would sure like to see what anyone has to say . Thanks.
Shawn

Remember Randy if its a good idea that all it takes is 3 legitimate changes to constitute a new patent. Is it going to be hard for a good engineer to redesign it. I talked to a guy who knew both patents and manufacturing and he said most ideas make their money in the first three years, after that, if its a good idea, the engineers will find a new design to get a patent on.

Some ideas are good and are patentable and take awhile to get noticed by the public but are hard to redesign, it takes awhile for them to catch on but in the long run they make their money that way, long term.

The United States patent office no longer wants prototypes, their engineers are good enough to figure out if it will work or not, in some cases they want to see one but rarely. I’m going through the same thing and my best advice is find someone who understands the idea and thinks its a good one and will sell, and is willing and able to give you the finances you’ll need.

I also talked to a guy last year and he said its not as common as it used to be in selling a good patented idea, the reason being there’s enough people who will buy your company after your selling your product, because its already proven its sales ability. In other words they will buy your idea after its a proven money maker. If you do get things rolling and you do make enough money, my advice is the first thing you should do is hire a part time engineer and have him try to make improvements, monthly, before someone can redesign and patent around it. Good luck and its not as easy as it may seem.

Go to Google/patent searches.com…its easy to navigate and gives you a 999% age if its patentable or not, clear back to the early 1900’s and its updated regularly. Good luck