(Excerpt from the Ebook “Common Sense Inventing”)
Getting an idea is not hard. Finding one that is profitable takes a lot more effort and research than most Inventors want to pursue. Almost daily I get emails from Inventors asking me to review their ideas and give them my opinion on them. The main problem I see is the Inventor has not thought out the idea to the point they can see its value or lack of value. They seem to only be concerned with how they are going to spend the millions of dollars they assume they will receive from this idea.
When you come up with an idea there are numerous questions you need to be answering before you spend any money in its development.
Here are just a few of the questions that you should be asking yourself:
• Have you done any research on your idea to see if it is already on the market?
• Is this something that adds value, solves a problem or will make a consumer happy?
• Is it something mass consumers would use?
• Who will be your end user?
• Is it a niche market product?
• How many end users do you think would use the product? (and don’t say everyone will because that is not realistic. Example: even if you
invented a car that got 70 MPG is everyone going to immediately throw their current car away to get yours? No they will not)
• Is it a onetime purchase or a recurring purchase such as toilet paper?
• Does it stand alone and make a new category or will it be competing against products already established and on the market?
• If it stands alone how will you get the company to see this as a profitable venture since they would be breaking new ground?
• If it is going against established products with a long history of sales what makes yours better and not just another of the same old thing
on the shelf?
• Is it unique to a certain gender/age demographic such as a training bra?
• Is your idea a really small niche market? For example, left handed males between 18 and 25 that live in desert climates working on oil rigs?
• If needed, how much do you estimate it will cost you to build a prototype, make a Sell Sheet, or CAD drawings?
You may be thinking why am I asking all these questions up front? Because most of these can be answered without going into debt and can help you get a big picture of where you will need to focus your efforts or should you stop before you go any further.
I want you considering all the factors of your idea. You can’t inflate the figures and expect to get a reliable answer.
Granted you may not know the answer to all the above questions, but it should get you thinking before you start putting down money and further time into the project. If you do as a number of Inventors have done before you and go into automatic mode and rush to your nearest patent lawyer you are doing yourself more harm than good. You are also needlessly putting yourself in debt.
Companies look for products that have mass appeal because they are more profitable and secure a larger customer base. You need to consider your ideas value and what you realistically (not what you want it to be) see it selling for in stores. You can do this by simply looking at what is currently available to get an idea of what the public is accustomed to paying for such a product. If you see the majority of them selling in the $5 to $12 range and you feel yours should be selling in the $89 range, you need to be able to justify this higher expense. Is your product so superior that the consumer will see that difference and be willing to pay the extra money or would they see it as a bunch of features they would never use and not worth the expense?
A good example would be; if you are wanting a knife that you plan on only using to spread peanut butter on bread. Would you buy a plain knife or a Swiss Army knife? The Swiss Army knife has several attachments that can be used to cut, slice, saw, and more. It is also more expensive than a plain simple single blade knife. For that matter you could use a plastic knife you got for free at McDonald’s. So, sometimes bigger and better are not always selling points.
Once you have an idea what your competitors are selling for in the market take that price and divide it by 4. This will give you a very rough idea what you need to be able to make your product for in order for it to make it to the consumer. Because once you have a licensing agreement the company pays X to have them made. Then they sell them to a distributer or store chain for X. Then the distributer sells them to a chain or if the manufacturer sells directly to the store, the store then sells it to the consumer for X. Each stop along the way adds cost to the product as they each add their cost and profit margin to the price. These additions happen until the product reaches the store and the consumer. So, by the time your product reaches the store it can be 3 to 6 times the original cost or more.
You are the first link in a long chain of events that have to happen for it to go from an idea to a finished product. And they each want to get paid for their efforts. So make sure you do your research up front to know your product and its industry as well as you can so you are making informed decisions along the way.