Compared to Edison, Franklin, Kettering, and other prolific inventors, I'm small stuff. But with a handful of patents and some experience at prototyping, manufacturing, and distribution in the modern era, I have learned a little bit that I am happy to pass along.

You can learn a little more about my background and inventions here.

Unfortunately, I predict that if you are an aspiring independent inventor, you will find the following observations discouraging. But it is reality as I know it, and it will be more helpful if it is not sugar-coated.

Marketing is more important than inventing

With all products, the key to profit is not in the invention or manufacturing (although those are critical), but in the marketing . . . That is where I spend most of my time. Marketing, not inventing.

Inventing is only the beginning. If I was to put a value on it, I would say it is worth about 5% of the success of a product. It just so happens, that is approximately the normal royalty fee paid to patent owners. But setting yourself up for a royalty is extremely rare, as discussed more fully below.

Unrealistic Expectations

Another critical point is that inventors are too much in love with our own ideas. We get frustrated when others don't have our enthusiasm, not to mention the willingness to invest. I have listened to many people with ideas they believe will revolutionize an industry. But they just can't understand that it lacks the necessary ingredients for commercial success.

I have experienced this personal myopia too. I have invented and developed some products at great expense that I was "sure" would succeed, only to find out that being in love with my own invention gets in the way of understanding the marketplace’s wants or needs!

Success Rate

In some cases, I have developed functional prototypes that performed as designed. They have impressed people. In some cases, I went ahead and developed expensive tooling and manufacturing because I was SURE it would be a commercial success, launched expensive advertising campaigns, but failed to sell enough to pay for the advertising. Those are commercial failures. But they are also educational and have taught me to do a better job of evaluating the need and other elements discussed on this page.

I would put my success rate at about 3 in 10 which I have come to find out is better than most inventors, but far less than the public perception. Some people observe my successful products or companies, and think that I always win. But that is not the case.

How can you get a realistic commercial view of your idea? How can you test market it? What should you do yourself and how much should you hire out?

I submit the following recommendations.

Patent Search

If you are interested in making money with your invention, start with a patent search. Fortunately, this has become inexpensive and easy with today’s technology. Go to http://www.google.com/patents and have some fun. You can search by number, name, category, and key phrases. When you find a patent that is similar, you can "drill down" through the "prior art" patents cited thereon. In a few minutes, you will have a pretty good idea of what has already been patented.

For instance, when I did a search for my adjustable golf club, I found that there had been 118 patents issued for adjustable or telescopic clubs since 1895. And the one in 1895 was pretty creative. Fortunately, I also learned from reviewing those patents that no previous design had my features. So even though there were a lot of prior patents, I knew I could make some claims that were unique.

Most people find that their idea already has several versions that have been patented. If yours is substantively different, you might be able to get a patent. But remember, a patent in the U.S. alone is expensive if you hire a legal firm to do the work. It can easily be $10,000 to $20,000 depending on the complexity and type, plus regular annual maintenance fees. If the patent is awarded, the value of that patent may be minimal. If your idea is commercially successful, IT WILL BE KNOCKED OFF, and your patent gives you the right to sue the offender...if you can find them...if you have the money...and if they have assets worth seeking. Patent infringement cases are very expensive to file and win. You can read more about the process from the U.S. Patent Office at http://www.uspto.gov.

Marketability

After you have determined whether or not your idea infringes on another, or if it is patentable, I suggest you work backwards in order to see if there is a realistic chance of profit.

Start with the consumer. While you are probably already convinced they will like it and that it will fill a need, the question is, "How will they get it?" (distribution) and, "How much will it cost to flow through the various levels of the market before it ends up in their hands?"

I've dropped two or three ideas with fully-functional prototypes after going through that marketability process. Now I evaluate marketability first. For instance, I designed a motorized pottery wheel that made it much easier to use than any machines already on the market. It had an easy-to-control variable speed throttle, a self-centering shaping device, and was quieter than other wheels. I had pottery experts use it and exclaim that was far superior to anything else on the market. In spite of all that, I concluded that the marketplace wouldn't pay enough more for it than the existing machines that already had well-established reputations and methods of distribution. Further, the retail value of a device like that is in the $300 to $400 range, and given the cost of manufacturing, the margin wasn't great enough to justify the advertising costs of selling it myself through my own website.

Another option would be to "license" it to an existing pottery wheel manufacturer. But that is not an easy process, and a typical license fee (royalty) is 5% of the wholesale value. The fact of the matter is that I have much more valuable things I can do with my time, so I abandoned (at least for now) what I believe would be the best potter wheel in the world.

Market Research

Basic raw market research is not expensive. Even casual research will help you. Do a lot of online searches for words or terms that might be associated with your product. Ask professionals in that industry if they have ever seen anything like your proposed invention. For instance, if it has to do with plumbing, find the oldest plumber you can, and ask them if they've ever seen anything like it before. Get their opinions. As them if it would be something they would use. If yes, ask them how much they would pay for something like it. Ask, ask, ask.

Ask people in the target market demographic if they would purchase a gadget like you describe if it were available? How much would they pay for it? Ask them to be brutally honest with you. But realize that your friends won’t want to hurt your feelings, so try to get the opinions of strangers too.

You might find that things like your idea have been done before, and failed commercially. That doesn't mean you should abandon your idea, but it does mean that you have a wealth of information from which to learn.

Manufacturing Issues

Will your product have to be manufactured by a manufacturer already in that industry? Or by any number of sub-contractors who make that kind of widget? For instance, with my Wishing Wells and Golf Clubs, I sub-contract to companies that do fiberglass, rotational-molding, injection-molding, investment casting, and vacuum-forming. I can pick from dozens of these vendors. I am the manufacturer and I sub-contract to them (not altogether different than General Motors sub-contracting much of its components to other companies). You have a lot more options if your product can be manufactured by non-specific industry vendors.

Royalties

If a manufacturer already in the end-product industry has to manufacture it, the best you can hope for is a royalty of about 5% of wholesale. But most existing companies do not accept outside ideas because it is a huge hassle working with entrepreneurial inventors. We are notoriously a pain in the neck to work with.

Aside from that, the economics of royalties are prohibitive. By the time the manufacturer/distributor pays 5%, their costs are inflated too high to compete with the inevitable knock-offs who will bypass the patent EVERY TIME and don't have that royalty cost! Similarly, they do not want to sign non-disclosure agreements because it puts them at a legal disadvantage with their competitors who simple modify the design or key elements to circumvent the patent.

When I invented my toy Vortx™ (the interactive coin-spinning piggy bank), I sent a final product to several toy companies (Mattel, Hasbro, etc.) to see if they wanted to distribute them. I already had $100,000 worth of molds and a tested injection molding manufacturer. I had already sold 50,000 of them so I had proven that people would buy them. I had a fantasy it would be the next HOT TOY and would sell millions of units. But the existing manufacturers were not interested. In some cases, I received the box back UNOPENED. All sent letters that they did not consider outside ideas. That was very discouraging. So I decided to continue to market it myself...which has turned out to be very profitable because I use the large floor model Wells as "demonstrators". I get to place those demonstrators INSIDE Wal-Marts, McDonalds, and many other locations. So I actually get better in-store locations than mainstream toy manufacturers who only get shelf-space.

Now, several years later and approaching a million Vortx's sold, toy companies still don't want to take it on because the cost of royalties make it impractical for them to make a plastic toy that can be marketed at a productive final retail price point. But on the positive side, I get to sell it for $24.95 and profit from the full difference between manufacturing cost and sale price rather than settle for the tiny sliver that would be represented by 5% of the manufacturing cost. Fortunately, it is the type of product that can be sold effectively over the Internet, and along with the larger floor model Wells as demonstrators.

Internet Selling

In the age of the Internet, it is much easier to market your own products than in the past. However, Internet sales still have overhead and costs that will affect the feasibility. For instance, there are credit card merchant fees, fulfillment (packaging and shipping), call centers if you have large volume, etc. But by far, the biggest cost is marketing and advertising. Gone is the day when a search engine listed you just because you existed. Now it costs a LOT of money to keep up with Search Engine Optimization (SEO) and most of them exist to make money, so you have the opportunity to "buy" your exposure. That is expensive.

All costs of running a business have to be considered, except that it can be done from your home, so you save the cost of a retail walk-in store-front. This is a BIG benefit, and one that can make all the difference to the feasibility. Several people have become millionaires selling products over Ebay...from their home.

I don’t spend time on "physical" products that sell for less than $100 retail, unless it is an up-sell product such as the Vortx toy. By "physical" I am making a distinction between products that require handling and shipping vs. downloadable software which costs less or nothing to inventory and deliver. For physical products, the manufacturing cost should be no more than 20% to 30% of the retail sale price. Otherwise, the inventory, shipping, advertising, and marketing costs make it difficult to have enough margin. Said another way, most of the logistical costs are the same for a $9.95 trinket as for a $300 golf club, but the little trinket doesn't even cover the hassle, even if 100% of it was profit...unless people purchase a dozen or more at a time.

On the other hand, if you have a less expensive commodity that can be delivered over the internet, then even small retail prices can be profitable. One of my products is Voxwire Online MeetingRooms which allow users to talk with anyone in the world over their computer. This product sells for $20 per month and offers unlimited global use. But because it is downloadable, I have no inventory or delivery costs, so the smaller dollar amount is not a problem.

Another benefit to a downloadable product is that it is much easier to sell internationally. And that is a MUCH larger market place than the USA alone. Although I ship Wishing Wells and Golf Clubs all over the world, my international success is limited by the logistics of delivery and distribution. The cost of shipping can result in a no-sale. The only limiting international factor for Voxwire is language, and that is fairly easy to solve. Thankfully, English is the predominant international language so there are plenty of customers to generate the volume before having to get into translating websites and instructions.

Finding Development/Marketing Partners

When I invented the large Spiral Wishing Wells, I didn't have enough money to build the tooling and develop the marketing. But I was ABSOLUTELY SURE that if I could only get the idea in front of someone with money, they would JUMP at the chance to provide financing.

Unfortunately, it wasn't that easy to attract interest. A doctor expressed interest. After lots of negotiating, I agreed to his terms. I was willing to give away half of everything I would ever earn, AND controlling interest for a meager $25,000 investment. In other words, I was willing to do all the work and make a silent investor a huge profit. Just before signing the agreement, he got cold feet and withdrew. Fortunately, I didn't give up.

That turned out to be his loss, because I found a way to get a fiberglass vendor to take a chance with me by making a mold and a couple production Wells on 30-day terms. The rest is history, as they say. I have sold thousands of Wells, and now count Wal-Mart, McDonald's, and other well-known companies as my best customers.

So for me, I'm glad no one was willing to invest. If they had, I would now be sharing my hard-earned profit rather than being my own boss. I much prefer the latter.

But I learned a hard lesson. If an inventor can't take it to the market him or herself, they aren't going to get much out of it . . . IF they actually have a viable idea.

My Co-Venture Policy

From time to time, various people have wanted me to join them in developing, manufacturing and marketing their invention. But in every case, they wanted WAY too much money (or percentage) which made the project unfeasible. What all us amateur inventors can't easily accept is that the invention, even of great products, is only about 5% of what's needed to make it a successful and profitable product IF it is ready for market. If the idea still needs prototyping, developing, testing, and tooling, that 5% drops to . . . well, not very much, and it is nearly impossible to attract an investor.

Summary

Therefore, independent inventors who actually make money usually develop their own ideas and manufacture and distribute their own products. This usually requires more resources and business background than most inexperienced inventors possess. So many good ideas stay in people’s heads or on a shelf in their garage.

Still, it can be done, and there is hope in that possibility.

If, after evaluating your idea in light of the information on this page, you are thoroughly discouraged, I am sorry for the cold water. But that is less painful than investing time and money without knowing what is ahead.

If your reading and research has giving you hope, and you believe you have something that has a profit potential, I wish you great luck in your inventing, manufacturing, and marketing endeavors.

Very Sincerely,