When inventors contact my company about Due Diligence I like to clarify the reasoning with a simple example. Consider it this way, if a manufacturer is getting ready to choose to develop, manufacture, and market a new product that could potentially cost $50,000 to $150,000 to produce plus inventory costs, they would most certainly take their time to ensure that these are making a good business decision in advancing with all the product (i.e.: they have done their homework on the product). Therefore, you can summarize “due diligence” as the entire process of gathering all the information necessary to make a good business decision before you make the large financial expenditure. It can generally be assumed that the more hours, effort and cash (i.e.: “risk”) that a company must spend to develop Inventhelp Product Licensing, the more they will evaluate the potential license. Keep in mind that even if a product is apparently simple and inexpensive, the process of developing and manufacturing is rarely simple and inexpensive. Companies will evaluate such criteria as customer opinions, list price points, unit cost to produce, competitive landscape, manufacturing feasibility, market opportunity, etc.
Inventors often wonder if they should perform Homework on the invention. As discussed, this can depend on the option you might have elected when planning on taking your products or services to advertise.
Option 1 – Manufacturing all on your own – If you are intending on manufacturing and marketing the invention all on your own, then yes you will need to perform research. Essentially, you feel the producer from the product and for that reason you need to carry out the due diligence on your own invention just like other manufacturers would. The issue i have found is the fact many inventors who elect to manufacture their own inventions do little, if any marketing homework, that is a big mistake.
Option 2 – Licensing for Royalties – if you are planning on licensing for royalties, i then believe you can minimize your homework efforts, because just before any company licensing your invention, they will perform their particular research. Should you be employing a company such as Invention Home, the expenses to promote your invention to companies can be minimal – therefore it may set you back more to completely carry out the due diligence than it could to just market the Patent Help Companies to companies (which, is ultimately your best type of homework anyway). Remember, you need to have taken enough time to accomplish your basic market research along with a patent search earlier along the way to be assured that your product or service may be worth pursuing to start with (i.e.: the merchandise is not really already on the market and you will find a demand).
Let me summarize. If you are intending on investing a large amount of cash on your invention, then it is recommended to analyze an opportunity first to make certain it’s worth pursuing; however, if you can actively market your invention to companies with minimal cost, you can be assured that an interested company will perform their particular homework (not count on yours). Note: it will always be useful to have marketing homework information available as you discuss your invention opportunity with prospective companies; however, it is really not always easy to get this information so you need to balance the effort and cost of gathering the details with the real need for having it.
Furthermore, i offers you some homework tips.As discussed, the idea of marketing due diligence is always to gain as much information as possible to create a well-informed decision on purchasing any invention. In a perfect world, we might have got all the appropriate info on sales projections, retail pricing, marketing costs, manufacturing setup and unit costs, competitive analysis, market demand, etc. However, these details might not be easy to come by.
If you are not in a position to pay an expert firm to accomplish your marketing evaluation, it is possible to carry out the research by yourself; however, you must understand that research should be interpreted and employed for decision-making and alone, it provides no value. It really is everything you use the details that matters. Note: I might recommend that you just do NOT PURCHASE “market research” from an Invention Promotion company. Often sold as being a “first step” (they’ll usually approach you again having an expensive “marketing” package), the information is largely useless as it is not specific research on your invention. Rather, it is actually off-the-shelf “canned” industry statistics, that will possibly not help you make a knowledgeable decision.
Before we reach the “tips”, let me clarify that “due diligence” can come under various names, but essentially all of them mean the same thing. A few of the terms i have witnessed to describe the diligence process are:
· Marketing Evaluation
· Commercial Potential
· Invention Salability
· Profitably Marketable
· Researching The Market
· Invention Assessment
Each of these terms is basically discussing the study to gauge the likelihood of an invention’s salability and profitability. The question of whether your invention will sell can not be known with certainty, however you can perform some steps to help you better understand the chance of success.
Again, if you are intending on manufacturing your invention by yourself, you should look at performing marketing due diligence on your own product. If you are planning on licensing your invention for royalties the company licensing your invention should perform this research.
A few recommendations for marketing research are listed below.
1. Ask and answer some fundamental questions
– Can be your invention original or has another person already think of the invention? Hopefully, you might have already answered this inquiry inside your basic research. Otherwise, check trade directories or perhaps the Internet.
– Is the invention a solution to some problem? If not, why do you think it will sell?
– Does your invention really solve the situation?
– Can be your invention already on the market? If so, exactly what does your invention offer on the others?
– The number of competing products and competitors can you discover on the market?
– Exactly what is the range of cost of these products? Can your product or service fall into this range? Don’t forget to element in profit and maybe wholesale pricing and royalty fee, if any.
– Can you position your invention as being a better product?
2. List the pros and cons that will impact how your invention sells and objectively evaluate your list
– Demand – will there be a preexisting interest in your invention?
– Market – does a market are available for your invention, and if so, exactly what is the dimensions of the current market?
– Production Capabilities – could it be easy or difficult to produce your invention?
– Production Costs – can you get accurate manufacturing costs (both per unit and setup/tooling)?
– Distribution Capabilities – could it be easy or difficult to distribute or sell your invention?
– Advanced features – does your invention offer significant improvements over other similar products (speed, size, weight, simplicity of use)?
– List Price – do you have a price point advantage or disadvantage?
– Life – will your invention last over other products?
– Performance – does your invention perform a lot better than other products (including better, faster output, less noise, better smell, taste, look or feel)?
– Market Barriers – will it be difficult or simple to enter your market?
– Regulations and Laws – does your invention require specific regulatory requirements or exist special laws that must be followed (i.e.: FDA approval)
3. Seek advice or input from others (consider confidentiality)
– Target professionals / experts inside the field.
– Demand objective feedback and advice.
– Speak to marketing professionals.
– Ask sales people in the field.
– Ask people you know within the field.
– Speak with close family and friends who you trust.
– Request input on the invention such as features, benefits, price, and when they would purchase it.
Through the diligence stage, existing manufactures provide an advantage in this they have the ability to chat with their potential customers (retail buyers, wholesalers, etc.). Inside my experience, one of the most key elements that the company will consider is whether their existing customers would purchase the product. Should I took How To Apply For A Patent With Inventhelp to your company to go over licensing (assuming they could produce it at the right price point), you will find a high likelihood which they would license the product if one of their top customers decided to market it.
Whether a retail buyer has an interest in purchasing a item is a driving force for companies considering product licensing. I’ve seen many scenarios where a company had interest in an invention however they ultimately atgjlh to pass through on the idea since their customer (the retailer) failed to show any interest inside the product. Conversely, I’ve seen companies with mild interest inside an idea who jump with a cool product each time a retailer expresses interest in it.