Don Debelak offers Affordable Patents www.patentsbydondebelak.com
This post discusses how to evaluate a product idea after it is developed to a certain extent to see if you should keep spending money through the final product design and then product introduction.
When you start out with an idea you have a vision of what the product will be like. After working on the idea for a while, the product starts taking shape and you have something people can react to that will indicate how the product will sell. You are entering a phase where you may be spending a lot of money, and may need to get investment partners. So you need to take a deep breath and revaluate where you stand. Inventors tend to move forward with lots of enthusiasm at this point. But that can be a big mistake as now is your last stopping point before a major investment.
This newsletter will have a summary of the five points, the next five newsletters will cover each of the five points in more depth.
- How effective are your patent claims? Many, many times inventor’s patent claims are scaled back by the patent office and they end up not being significant. The way to judge a patent claim is how many qualifiers or steps there are. When the first claim (the most important claim) has four or five points, a competitor only needs to only be different in only point to not violate the patent.
- Does the product have good value when compared to competitive products? People are solving the problem your product addresses in some other way. If your product costs the same as other solutions, but does a much better job, then you are providing value. IF it costs less that is even better. But your product can cost more, the iPhone is certainly more expensive than other products, but then it has to be worth the extra costs. You can often see if customers see that your product offers value by showing your product, even if it’s just a brochure, versus other products and then simply ask people to rate the products based on which one they feel has the highest value.
- Can you make the product for 20 to 25% of the expected retail price? Retailers typical mark a product up 50% so that means your wholesale price is 50% of the retail price. My experience is that it is difficult to make money if you can’t sell your product at wholesale at a price twice as high as your manufacturing costs. If you sell direct the same 25% rule applies as you will have much higher sales and marketing costs to bring your product to market. Many inventors ignore this rule, but it is not a good idea as they ending up spending lots of time, money and energy without making any money.
- Can you afford to manufacture the product with “world class” fit and finish? This is one area where the invention world has changed dramatically over the years. In the past inventors could get by with a more handmade or rustic look. Not anymore. You will find that people simply won’t buy a product that looks like it was made in a blacksmith shop. But getting the professional look can call for large tooling expenses or other expensive equipment and it might be more money that you can afford. I found that often SCORE (www.score.org) Service Corps of Retired Executives frequently has manufacturing experts on their staff that can help you if you don’t understand how to find the right manufacturer. Their services are free, and while they won’t do the work for you they are very useful mentors.
- Do you have an effective marketing and packaging strategy? New inventors almost always totally ignore packaging and marketing till they have spent a ton of money getting ready to manufacturer without ever considering how to package and market the product, including what type of distribution to use. Selling the product is very difficult, and it is an area where inventors run into stiff resistance. When you approach a prototype company to sell your product, of course they will help you out, you are paying them. The same principle applies to manufactures and anyone else you pay. But in marketing and distribution, you are asking people to invest their own money and resources in your product, and they won’t do it unless they believe the product will sell. I fell you iron out your sales and distribution plan before spending money on your product, and have a clear idea how you will sell your product and who you will approach to sell your product. Without effective marketing, all the other money you spend will be wasted.