To start, let me address a common misconception with many first-time inventors who start with an idea but have little understanding of how to actually make money from their invention (i.e.: they don't understand the options for taking their idea to market). Many inventors believe that they need to spend tens of thousands of dollars developing and manufacturing their ideas on their own to succeed, which is why you read so many stories about inventors who spent their life savings chasing an invention. While manufacturing is one option for certain inventors, it is not the most common option and certainly not the least risky.
The two main options that you can consider for developing your invention are:
Option 1 - Manufacturing and marketing your invention on your own
Over the years, I have worked with hundreds of inventors and a common misunderstanding that I see is the idea that succeeding with an invention means developing, manufacturing and marketing the invention on their own. As a result, these inventors spend a small fortune developing prototypes and setting up manufacturing before they ever receive expressed interest or purchase orders from companies. When deciding how to proceed, you should first think about your ultimate goal. If you are trying to build a business around your idea and become an entrepreneur, then manufacturing may be your option; however, if you are looking for a company to pay you for your idea, then this would not be your best approach. Note: if you elect to develop and manufacture your idea on your own, I would recommend that you try and secure interest and/or purchase commitments before you pull the trigger on manufacturing. There is a big difference between developing a prototype and setting up manufacturing.
Option 2 - Licensing for royalties
In my experience, 98% of inventors end up going this route, which means that rather than manufacturing and marketing the invention on their own, they try to find a company to license or purchase the invention's patent rights from them in exchange for a royalty or cash payment. The idea is to have an established company develop, manufacture, and market the invention along with their existing product lines. The key to success with this approach is to adequately and professionally prepare your idea for presentation with related manufacturers or distributors to discuss license opportunities, which can range from simple designs all the way through fully developing your invention.
Before we move on though, I'd like to reinforce that it is very important to understand that your odds of success increase as you move through the development and patent process, regardless of how good you may think your idea is. For example, if you are in the concept stage without any patent protection and no formal product designs or prototypes, the odds of success are limited if you try to approach a company; however, as your idea becomes more developed and "real" with a professionally designed virtual or physical prototype, your chances of success increase.
The same holds true with patent rights. If you have an issued patent from the United States Patent & Trademark Office (USPTO), your odds of success are better than if you had patent pending status or no patent at all, assuming your idea is good to begin with. Unfortunately, it really will not make a difference what you have in place if your idea is bad to begin with.
Overall, the trade offs are time, effort and money. By investing the right amount of time, effort, and money into your idea, you increase your odds of success. In my view, the goal should be to minimize your cost and risk by investing enough into your idea to be able to share it safely and effectively with companies before pouring money into the idea. For example, you may be able to start out by filing a provisional patent before it becomes necessary to file a full utility patent. [If you do find a company to license your invention, it's possible that you can negotiate for the company to pay for the utility patent.] Also, you may want to start by designing your product "virtually" before you move into the expensive prototype process. Again, you can obtain interest and license the invention without investing a lot of money into prototype development. If lack of a working model becomes a roadblock and you're hearing good feedback, you may want to explore developing a working or tangible prototype later in the process if you have the financial resources to do so. The idea is to work smart through the process to reach a license agreement without spending more money than necessary on the product.
Russell Williams cofounded InventionHome.com and MatchProduct.com to assist inventors and entrepreneurs through the patent and invention development and marketing process. He's been asked nearly every invention-related question in the book, and shares his wisdom in an article series, "Inventor Q&A".
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