Here are some Amazing Tips for our inventor friends and the Philadelphia Inventor Community!
by Jeffrey Dobkin
I get questions from inventors all the time.
The most common inventor question sounds like this: “I have several ideas and inventions I’d like to move forward. Any suggestions?”
While this is way too broad for a specific invention marketing plan, here are some generalities I can suggest to inventors.
1. First: Inventors beware.
There are a lot of bad guys out there. If a firm says your idea is the greatest thing since sliced bread and wants to market it, make sure you ask how many inventors they have “helped” and have actually brought in more money in sales than they charged the inventor. Get the exact, specific percentage and the exact number. If they fudge, or don’t answer – don’t call back – they’re one of the bad guys.
Invention companies seem reputable because they say right up front, they don’t want “to steal” your idea, and they tell you “Oh, don’t tell me your idea – wait till I send you a nondisclosure form!”
It’s true, they don’t want your idea. They just want your money. But, they don’t tell you that. Yea, that’s the part they always seem to leave out.
The unscrupulous invention marketing firms were so good at fleecing unsuspecting inventors, specific laws were passed just for them.
In fact, The American Inventor’s Protection Act of 1999 (public Law 106-113) states you should ask the questions found at the back of this article, and the law states the invention promoter must answer.
2. Good news: you can go to the USPTO.gov (Patent) site and look at all the patents.
Bad news – your ideas are probably already out there, patented, with prior art (“prior art” is lawyer-speak meaning your idea or concept is covered by an old patent and therefore not patentable.)
While you may see similar patented inventions, a possibility exists that you may be able to get patent! But – and this is a big but – it may be a weak patent that will not be readily defensible in court.
Better News: You don’t need a patent to sell your invention.
Keep in mind: A Patent Doesn’t Protect You.
A patent doesn’t protect you, a patent only gives you the right to protect yourself. Big difference between these two statements. Big, big difference. A patent only gives you the right to sue someone for infringing on your patent.
In fact, you probably don’t need a patent unless you have a lot of money. Are you willing to go out to Montana and sue someone if they infringe on your claims? Because that’s what it may take to protect your patent.
3. Let’s talk marketing, sales and money.
That’s where I come in. I’m only concerned with “Marketing” or… “Can we make money from this idea?”
So if you have lots of ideas, you need to figure out which idea you have that is the most “commercially feasible.”
Commercial feasibility means you can sell it and make money from the sale.
Many great, great ideas are not able to be sold at a profit.
This has little to do with how great an idea is, only with its ability to be sold at a profit.
There are lots of reasons a product may not be commercially successful, and here’s just a few:
· You can’t make it within budget
· Can’t sell it at a reasonable cost
· Can’t sell enough of them
· High molding costs are prohibitive
· Someone’s marketing a similar product at a lower price
· Someone’s marketing a similar product and has tied up
all the distributors and retailers
· High entrance barriers to enter industry
· Can’t find or define a readily identifiable market
segment that you can reach at a realistic cost
· Your product isn’t different enough to differentiate
it from other competing products,
· and last but certainly not least – your cost to sell one exceeds it’s price. This means even though your product costs you $2 to manufacture, and you can sell it for $10, it costs you $11 to put it in front of people who will purchase it.
Don’t forget the most probable problem in marketing: you can’t easily (cost effectively) separate and reach the defined set of people who would really want your product (your market) from all the other people in the world.
These marketing problems are just for a start – and you need to figure out the answers to each before you start a business based on selling any of your inventions.
4. OK, still want to move forward?
Here’s what to do: Move your one big invention with the most potential to make money forward. Put the rest on hold.
5. Go out and get all the industry magazines, and association newsletters for that industry.
Here’s how: Go to the library and look up the trade magazines in the magazine directories such as Bacon’s Magazine Directory or Oxbridge Communications Directory of Periodicals.
Visit the SBDCs(Small Business Development Centers) found at most colleges. They have online subscriptions, so those industry magazine lists might be available to you also.
Get magazines free by calling the publisher and asking for a “media kit” and sample copies. Don’t let them blow you off to their website and the internet – make sure you get real paper printed sample copies. Read them, study them.
6. Make a prototype. Make sure it works.
7. Now, make better looking prototype.
8. Find manufactures in the Thomas’s Register of Manufacturers at the library (the on-line one isn’t nearly as good).
Get pricing from someone who makes similar products – get pricing for manufacturing runs for 3 (a test run), then for 100 (test of marketing run), 1,000 and 10,000 or more.
9. Make better looking prototype. Seriously, your prototype sucks. Make a better one this time.
10. Perform the Jeff Dobkin Commercial Feasibility Test:
This is the ONLY way to know if your product will sell:
After all the “Wow – this is great!” blah-blah settles down, tell him you have one in the car and ask if he’d like to buy it and tell him the price.
If he takes out his wallet — you have a product that is “commercially feasible.”
Note: if he just keeps saying how great it is, you didn’t make the sale. No Wallet No Sale. Get it?
Selling Through Retail Stores
Keep in mind if you are going to sell through retailers, they will want to double their cost when they sell it at retail. If they buy it for $12, they want to sell it at $25, and mark it on sale for $19.95.
If there is a distributor involved he will want to make a 33% mark-up on his cost. If you are going through a catalog – they usually mark a product up 3 to 5 times. Sometimes more (but sometimes less.)
Yes, you read that right. So if you are manufacturing your invention for $7 and selling it for $10 to friends that price model doesn’t work when it is put through the traditional retail distribution system.
Pricing Structure:
By the time your invention goes through regular distribution channels here’s the way the pricing structure will lay out: Your costs: $7, you sell for $10 to a distributor, the distributor sells it for $13.33 (a 33% mark-up). The retailer buys for $13.33 sells for $26.95, putting it on sale for $24.95. A catalog house buys from you for $8.00 (they buy a lot to get this price as they act as distributor, retailer and advertiser, and sell for $24.95 to $29.95, almost a 4x markup.
Here’s my number ONE marketing tip to all inventors when starting to sell their invention:
11. Get the National Directory of Mail Order Catalogs (GreyHouse Publishing).
Send an inquiry letter to all appropriate catalogs asking how to get your product in their catalog. (Before any catalogs purchase, they’ll need to see a sample.) If they purchase it and it sells in their catalog, they can sell plenty of product depending on how many catalog they mail out each year (Bass Pro Shops mails almost 60 million catalogs each year!)
Never send to “New Product Committee”. Always get a name so you can follow up.
For all the above, you DON’T need a patent. It’s amazing how many people tell me they can’t sell something that isn’t patented. You can. Quit asking.
12. If you’re trying to license your idea, then it may be stronger to negotiate with a patented product to get the strongest deal, or it might not!
Go to the Department of Energy website – DOE.gov – and get the booklet, “Making the Licensing Decision.” It’s free. Read it. Hummm… licensing isn’t as easy as you thought, is it?
If successful, send me a bottle of champaign. If really successful, just send a lot of money and I’ll get my own champaign.
13. Buy my books.
“How To Market a Product for Under $500!” is the best, most practical, useful book on marketing ever. No history, no theory, and no B.S. not one wasted page — and that’s not just my opinion, it’s… OK, it’s just my opinion.
“Uncommon Marketing Techniques” offers short articles on practical marketing methods. Order online from JeffreyDobkin.com.
Hope this is helpful. Jeff Dobkin
Jeff Dobkin will now take your questions. Dobkin has written 5 books on marketing and two on humor. Questions? 610-642-1000 rings on his desk. Write to him at the Danielle Adams Publishing Company, Box 100, Merion Station PA 19066. Jeffrey Dobkin is the Past President of the American Society of Inventors, and has served on their Board of Directors for more than 15 years. Visit him online at JeffreyDobkin.com.
This bill is the law and is for YOUR protection. Here is the specific bill:
This subtitle may be cited as the
‘‘Inventors’ Rights Act of 1999’’
SEC. 4102. INTEGRITY IN INVENTION PROMOTION SERVICES.
(a) IN GENERAL
Chapter 29 of title 35, United States Code, is amended by adding at the end the following new section: §297. Improper and deceptive invention promotion
(a) IN GENERAL
—An invention promoter shall have a duty to disclose the following information to a customer in writing, prior to entering into a contract for invention promotion services:
‘‘(1) the total number of inventions evaluated by the invention promoter for commercial potential in the past 5 years, as well as the number of those inventions that received positive evaluations, and the number of those inventions that received negative evaluations;
‘‘(2) the total number of customers who have contracted with the invention promoter in the past 5 years, not including customers who have purchased trade show services, research, advertising, or other nonmarketing services from the invention promoter, or who have defaulted in their payment to the invention promoter;
‘‘(3) the total number of customers known by the invention promoter to have received a net financial profit as a direct result of the invention promotion services provided by such invention promoter;
‘‘(4) the total number of customers known by the invention promoter to have received license agreements for their inventions as a direct result of the invention promotion services provided by such invention promoter; and ‘‘(5) the names and addresses of all previous invention promotion companies with which the invention promoter or its officers have collectively or individually been affiliated in the previous 10 years.
‘‘(b) CIVIL ACTION
(1) Any customer who enters into a contract with an invention promoter and who is found by a court to have been injured by any material false or fraudulent statement or representation, or any omission of material fact, by that invention promoter (or any agent, employee, director, officer, partner, or independent contractor of such invention promoter), or by the failure of that invention promoter to disclose such information as required under subsection (a), may recover in a civil action against the invention promoter (or the officers, directors, or partners of such invention promoter),
in addition to reasonable costs and attorneys’ fees—
‘‘(A) the amount of actual damages incurred by the customer; or
‘‘(B) at the election of the customer at any time before final judgment is rendered, statutory damages in a sum of not more than $5,000, as the court considers just.
‘‘(2) Notwithstanding paragraph (1), in a case where the customer sustains the burden of proof, and the court finds, that the invention promoter intentionally misrepresented or omitted a material fact to such customer, or will fully failed to disclose such information as required under subsection (a), with the purpose of deceiving that customer, the court may increase damages to not more than three times the amount awarded, taking into account past complaints made against the invention promoter that resulted in regulatory sanctions or other corrective actions based on those records compiled by the Commissioner of Patents under subsection (d)
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