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[313230]

Hi everyone!

I need to estimate the value of the invention, in order to know does it have worth to pursue.

In general, how many percent does the inventor get from a sold product?
How many does the manufacturer get?
How many does the investor get?

I could estimate the manufacture cost, so how much will it be when comes to retail?

Thanks in advance!

[bartmans]

This is more like a marketing or price-setting question.
Like so many things, kit will depend entirely on the settings of the case (e.g. what is the relationship, both contractual and in every-day practice between the three groups that you have mentioned?), on the commercial success of the 'invention', the relationship between teh invention and the product (was the invention ready for sale, or did it need a lot of development and evenen research, still?) and the field in which the invention is sold (in engineering/mechanics a lot of different aspects play a role than in IT/internet, and that again is completely different from life sciences/pharmaceutics).

There is thus not a simple calculation to be made that is generally applicable.

Regards.

[313230]

Thanks bartmans!

I think it isn't a marketing or price-setting question, but a self-value question

I am an independent inventor and my invention is a input device for computer, let think its a new mouse, that is. I have prototype, but to manufacture it needs some development but isn't much.
I calculate manufacturing by parts' cost and it's acceptable, and that I could start a small business and do it myself but I fear that I don't have experience and other abilities to run it. I think of between do-it-myself and make a cooperation with a manufacturer (licensed) to maximize my profit, in just a pure greedy theoretic calculation.

I did some quick search and I don't have any plan to pursue a patent yet until I have a better vision about my share and profit, am I too cautious? In that field, input device for PC, how much could I hope for in the best or worst scenarios? I just need some raw numbers of what-is-going-on for a quick estimation.

Regards.

[Isaac]

I think it isn't a marketing or price-setting question, but a self-value question

I'm not sure your question has been asked in a useful way.

For example, how much money an investor will expect should depend on how much the investor has to put up and what the risks are.  The investor will want a return on investment that cannot be gotten elsewhere with a lower risk.  What percentage that turns out to be depends on time and sales volume.

Perhaps you need to think about revenue splitting in a different way.   People can toss you the numbers that worked for them, but those things will be meaningless if the underlying assumptions do not apply to your product.

[Yak]

I have prototype, but to manufacture it needs some development but isn't much.
I calculate manufacturing by parts' cost and it's acceptable...

Coming from a manufacturing background and having worked with inventors attempting to license their inventions to a manufacture, basing your calculation on parts is unfortunately a dangerously shallow way to estimate costs.  For a manufacturer there is a lot of tooling and other start up costs do manufacture anything on a large scale.  Not to mention shipping and distribution costs.

... and that I could start a small business and do it myself but I fear that I don't have experience and other abilities to run it.

You kind of see for yourself what is involved in making a product. Not only is there manufacturing experience needed, but consider the cost of the machinery you will need to purchase to begin to make the product.  Unless of course you plan on having each one be hand made.

I think of between do-it-myself and make a cooperation with a manufacturer (licensed) to maximize my profit, in just a pure greedy theoretic calculation.

Less risk and skin  you have in the game, the less your profit will be. 

I did some quick search and I don't have any plan to pursue a patent yet until I have a better vision about my share and profit, am I too cautious?

If you do not feel you are ready for a patent, what do you hope to offer the manufacturer?

In that field, input device for PC, how much could I hope for in the best or worst scenarios? I just need some raw numbers of what-is-going-on for a quick estimation.

Best: To crush your enemies, see them driven before you, and to hear the lamentation of their women.
Worst: Nothing

[313230]

Thanks you guys, it really helps alot!

If you do not feel you are ready for a patent, what do you hope to offer the manufacturer?

I'm ready for the patent, but I am not ready to spend money on it. I always try to figure out what to do before I really do it

Best: To crush your enemies, see them driven before you, and to hear the lamentation of their women.
Worst: Nothing

Oh I see

I meant the best and worst for the most of the normal successful cases

[JimIvey]

Okay, here's my age-old formula for how much a patent is worth.

First, identify all feasible products/services that will infringe the patent -- i.e., the claims that you'll be able to convince the examiner are not obvious and otherwise meet the requirements of law.  Don't limit yourself the products/services that currently exist or are readily imaginable.  Your patent won't expire for 20 years, so you have to understand what products/services would be feasible then, too.

Then, you must do the following for each and every product or service you've identified.

Calculate the complete market size, in dollars, for the product/service in the jurisdiction in which you'll file the patent application (e.g., US) over the life of the patent.

Calculate the cost to produce or provide the product or service to get the profit margin.

Aggregate the profit over the life of the patent.

Identify the closest non-infringing competing products and services, not just those that currently exist but those that might exist over the next 20 years or so.  Perform similar calculations to derive an aggregate profit for the competing goods and services that are alternative for the product or service.  But, you don't use the total aggregate profit for all sales of those alternatives.  Instead, you only use the sales at the volume of your product or service.

Now, subtract the profit of the alternatives from the aggregated profile of your product or service to derive an aggregate value-add of your technology for that particular good or service.

Then, sum up all value-adds for the various products/services covered by your patent.  That sum represents the total value-add of your patent.

If you intend to make and sell your product/service, you can count that as the total value.  Though you'll have to reduce the value using probability of the various claims not getting allowed, etc., along with the cost of filing and prosecution.

If you intend to license your technology, you'll have to share some of that total value-add with the licensee or they have no incentive to use your technology rather than the alternatives.  To determine how much the licensee will take, you'll have to calculate the result of negotiation with the licensee.

In addition, you have to calculate the odds that someone will go ahead and infringe your patent anyway, the cost of enforcing the patent against them, and the amount you'll be able to recover.  You can re-use some of your work above in determining the "reasonable royalty".  But, you'll also have to scale your numbers according to the odds of prevailing or losing in your enforcement campaign.

Don't forget to estimate future maintenance fees and their costs in maintaining your patent over its life.  And, to the extent your technology lead to market lead-time at its expiration, include that as part of your value-add calculation.

Now, sometimes the market-lead in a patented area leads to first chance at more innovations -- and thus more patents.  Just repeat the above for any patents that will derive from your market lead.  And, of course, those patents can lead to more, so just extrapolate recursively.

That's it.  And, I give that freely -- no copyright, no other IP.  Feel free to print that out and just whip it out and quickly calculate the value of any patent(s) for any idea you come across.

Regards.

[dtpater]

Your Patent is worth nothing unless you can get the (level of Interest) required from the interested parties and in the end it comes down to negotiation within friendship and trust, so the market decided's the Patent value and not the Inventor, if you go into a possible deal to unrealistic, just because someone said its worth a certain dollar figure, try asking the interested parties what is a fair and reasonable thing, because they are putting their hand in their pocket and not you at that point.

Lots of Pie in the sky stuff that is a long way from the realities, some Inventors get the wrong mindset, I have seen it many time's, (to big for their boots I call it and kill the deal), if there is no diving force in return from the Interested Parties after the first meeting, in other words follow up e-mails and phone call's, then the interest is not high enough in your patent for a License Agreement.

these are great comments below from Yak

Coming from a manufacturing background and having worked with inventors attempting to license their inventions to a manufacture, basing your calculation on parts is unfortunately a dangerously shallow way to estimate costs.  For a manufacturer there is a lot of tooling and other start up costs do manufacture anything on a large scale.  Not to mention shipping and distribution costs.

If this was easy at least 50% of Patents would be in the market place every year, being realistic its only 1% of all Patents end up in the market place.

http://aspriegel.wordpress.com/2010/11/24/invention-success-rates-odds-of-inventor-success/
 




 

[dtpater]

Quote from: 313230 on 02-09-11 at 04:43 am
I did some quick search and I don't have any plan to pursue a patent yet until I have a better vision about my share and profit, am I too cautious?
If you do not feel you are ready for a patent, what do you hope to offer the manufacturer?

Well the above is very interesting, you can get an Investor or fund it yourself the Patent, but really the best people to Invest are the Manufactures because they know the market way better than most Investors or Inventors.

(The Below is in reference to a Development and Brokerage Agreement)

I just finalized a deal for a new Deck Tool, between the U.S Inventor and a Taiwan Manufacture, the interesting part is this has taken 1 year to finalize due to many reasons, started with a DOG and ended up with a Cat for example with the design and function, so the original patent application by the Inventor is of no value.

The prototype was a the Cologne Show in Germany last year, and due to feedback from a Woodworking expert in the USA and the manufacture and Inventor, we have a different new product that is way better than what we started with (its a Trade Secret until the Patents are lodged in the next 2 weeks), now under assignment of Patent rights the Inventor will be named the Inventor and the manufacture the Assignee, the manufacture are now carrying the whole risk and the Inventor receives 11% royalties of the FOB Price Taiwan.

To me the Traditional method of Licensing is only half right, there are many ways to do this, consider this Inventor spent $35,000- on another project for both the U.S Patent and a nice Prototype, only one problem, no manufacture wants to take the risk, they all want the Inventor to put his hand in his pocket further. all that being said consider the below.

Invention 1. owes the Inventor $35,000- and a small chance of success

Invention 2. owes the Inventor $1,000- and a high chance of success due to the 100% support of a Taiwan Manufacture who has been doing this over 30 years.

all I can say is you need a absolutely brilliant Invention to Invest big $$$$ in Patents because anything less will fail.

The Terms for Brilliant could also mean a brilliant product like this Pizza cutter below from the Marketing view!

http://www.rogerbrown.net/help/

 

P.S  Many Brands I deal with want the Inventor to do all the ground work and supply the manufactures drawings, tooling files and cost's to Manufacture from Asia, they say what is your FOB Price out of Taiwan or China for example, if you can provide this then you have a much better chance than just a prototype and patent applied.

(You can manufacture a bluff sell sheet with the Asian Manufacture before hand), once the level of interest is high enough, then the tooling can be committed to, not before. (some mindsets I learnt from being in the Australian Army (Sapper), Digger ways)

This is no exact science so do what ever works best for you!, getting your new products into the Market.

[dtpater]

Quote from: 313230 on 02-09-11 at 04:43 am
I think of between do-it-myself and make a cooperation with a manufacturer (licensed) to maximize my profit, in just a pure greedy theoretic calculation.
Less risk and skin  you have in the game, the less your profit will be.

That Skin, can be your own time, and less $$$$ (shift the money risk onto other parties, manufacture and distributor) (get royalties and commission from both, get you ticket clipped twice for the one new product), in others words you do all the follow up and join all the dots.

for example, one product makes me a profit based on 3 e-mails and a phone call, the others are still working to pay off the outlay.

like one Inventor said on another forum, you need to line up all the planets in the process, that's the key!
 

[313230]

Thank Jim, that would be a lot of calculation 

And thank dtpater! As you said, I think I will to work as a medium between investor, distributor and manufacturer, and try to shift all the risk onto them 
Somehow I love to see my product getting into the market, even it means zero profit for me, but I will try to play smartly.

I wish me luck, and wish all the best things for all of you, too!

Regards