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What is Licensing

Licensing Your Idea / Invention How do I know if it is right for me? 

How To License Your Idea, Invention or Product Is the licensing model right for you? 

If you have additional questions, please click here to set up a phone call with a member of our team. 

What is licensing?

There are different kinds of licenses. Essentially, and especially for our purposes, licensing is the renting of an idea. When you license your idea, you give a company with a lot of powerful resources the privilege of bringing it to market in exchange for compensation, aka royalties. The terms under which you extend this privilege differ, because no two licensing agreements are the same. Royalties are based on a negotiated percentage and paid out per unit sold on the wholesale price, typically four times a year. Royalty rates generally fall between 3 and 10 percent. Consider the huge volume large companies are capable of doing — a really nice royalty can add up fast.

Essentially, when you choose to license an idea, you tap into the unlimited finances large companies have. You get them — aka their manufacturing, sales, marketing, and best of all, distribution team — working for YOU. If they're in 20,000 stores, guess what? You can be too.

Why would I want to license my product for a royalty when I could manufacture it on my own and keep all the profit?

Great question. Let's put things in perspective. Product development takes a lot of time, not to mention resources. There's also manufacturing, distribution, sales, and marketing to consider. Starting any kind of business is an enormous undertaking, let alone a product-based one. (Stephen knows: He started and ran a very successful guitar pick business for a few years.) When you license your idea instead, what you're really doing is finding a partner who will do the heavy lifting for you.

The way we see it, for many inventors, licensing is an ideal partnership. You no longer have to raise capital. You no longer need to fight to take away shelf space from another company. You no longer have to go through the lengthy process of establishing relationships with retailers. You no longer have to concern yourself with cash flow, which is the undoing of so many new businesses.

Better still? You don't have to quit your day job to do it. You can live anywhere. (We have students come to us from all over the world.) You can focus on coming up with more ideas, if that's your thing.

These are all huge pluses. There are more. Licensing is also a faster route to market, which is fantastic, because speed to market is so important these days. It's also a form of protection in and of itself.

  • Retailers want to deal with companies that have 10, 20 — even hundreds of products. Many retailers don't take one-product companies seriously and are very concerned you'll have enough cash flow to deliver consistently and on time.
  • When you start your own company to bring an idea to market, you will most likely need hundreds of thousands of dollars to be successful. That's even when your product costs only pennies to make! After decades of licensing his ideas, Stephen founded an innovative guitar pick business in part because he wanted to experience what it would be like on his own. His picks cost about eight cents a piece to manufacture and sold for almost 90. Although the picks were a hit from the start, he still needed more than $200,000 to get the business off the ground — and says he could have used an additional $100,000 to better market his innovations.

Your licensee takes on the risk of bringing a new product to market, not you. You capitalize on the company's experience, legal department, and size when you license your idea. We love that licensing is low risk. You can become an entrepreneur, you can see your idea realized — all without having to mortgage your home.

If you don't have the time, money, or interest to start a business to bring your idea to market, you should seek out a licensing deal.

Why would a company pay me for my idea? Isn't it just going to rip me off?

Most companies do not steal ideas. Do they sometimes work around them? Yes. Companies that have embraced open innovation want to work with independent inventors, not rip them off. Companies don't want the bad press. They don't want to be sued. It's not worth it. In all of the years we've been in business, not one of our students has had an idea stolen from him.

You do need to be a professional, though. You need to be smart about protecting yourself. There are so many ways to do so beyond filing intellectual property. You need to learn how this game is played and the language of licensing. If you are reasonable, if you are someone companies want to work with — you won't give them a reason to try to work around you. We will teach you how to outthink and act any and all competition.

Don't I need a patent?

No. We teach our students how to license their ideas using intellectual property strategically. More often than not, filing a provisional patent application (PPA) is enough to license an idea. In fact nearly 95 percent of the licensing agreements our students sign are for ideas that have not been patented. Patents don't sell ideas. Benefits sell ideas. Unfortunately, many patents are filed out of fear. We think that's a mistake. We strongly believe in the importance of testing the market before investing in an idea. Patents are expensive. Beyond that, they're just not needed.

If you've already filed a patent application, that's okay too. We'll help you fully utilize that asset. However, you won't need to take that financial risk again using inventRight's approach to licensing.

I don't know how to prototype my invention. I'm not a sales expert, either.

The only thing you need to become an expert on is your idea. We want inventors to realize they're not licensing their patent or a prototype, not ever. Benefits are what compel companies to license ideas. We will teach you how to create highly effective marketing materials, like your sell sheet, that will do the selling for you. We will teach you how to prototype your idea inexpensively so that you can film a killer infomercial, which you'll include in your sell sheet.

Sometimes building a more refined prototype is necessary. But it makes so much more sense to invest in one after a potential licensee has expressed sincere interest — not before. Licensing is a numbers game. You can't afford to prototype and patent every idea you have. If you work at progressing through each step in our system, you will start contacting companies in no time. You will discover how easy it is to communicate with them.

I'm looking for a licensing agent. Why don't I just hire one to license my idea for me?

There's no such thing. Please be wary of companies promising to do it all for you. You need to become an expert on your idea. The reality is no one else is ever going to be as excited about it as you are. You will need to champion it across the finish line. Our approach is all about teaching you how to do that, so you can do it again and again. We want to empower you with knowledge. We know anyone can do this. It's very learnable. We're here to help and your coach will guide you every step of the way.

Is Your Product Right for Shark Tank?
 

Comments 37

Andrew Krauss on Monday, 17 June 2019 16:36

Hi Melissa, Feel free to call us at 650-793-1477 or book an appointment to talk to us here https://www.inventright.com/contact We are very experienced at breaking things down and making your next steps clear and easier to do one step at a time.

Hi Melissa, Feel free to call us at 650-793-1477 or book an appointment to talk to us here https://www.inventright.com/contact We are very experienced at breaking things down and making your next steps clear and easier to do one step at a time.
Michael Avery on Tuesday, 02 July 2019 20:03

Hello , this is so needed for Product Developer's I love it !

Hello , this is so needed for Product Developer's I love it !
Guest - Rushikesh Dahiwal (website) on Sunday, 18 August 2019 21:58

Hello!
I am a student from India. I have a great idea and I also filed a patent in India. I think this idea can sustain for more that 10 years. Do I need to file an international patent too?

Hello! I am a student from India. I have a great idea and I also filed a patent in India. I think this idea can sustain for more that 10 years. Do I need to file an international patent too?
Andrew Krauss on Monday, 19 August 2019 09:48

Patents cover you in whatever country they are filled in. So if you are going to file a patent, you'd want to file it in the country in which you plan on selling. With that said, many of our students simply file a $70 Provisional Patent Application and are able to license to big companies without ever upgrading to a full patent if the company doesn't care about patents or sometimes you can get the company to pay for the patent.

Patents cover you in whatever country they are filled in. So if you are going to file a patent, you'd want to file it in the country in which you plan on selling. With that said, many of our students simply file a $70 Provisional Patent Application and are able to license to big companies without ever upgrading to a full patent if the company doesn't care about patents or sometimes you can get the company to pay for the patent.
Andrew Krauss on Monday, 19 August 2019 08:35

Hello Rushikesh,

I would recommend filling a US PPA (Provisional Patent Application). It's only $70 and will give you one year in the US to say patent pending. If there is interest, we can show you how to get the company you sell your idea to (licensee) to pay for the patent. We have had many inventRight students in India. Most focus on the US market as it's easier to license to a US company compared to an Indian company. Don't limit yourself to your geography! Take a look at our bootcamp and consider joining.

BootCamp One On One Coaching
Complete details on inventRight BootCamp One On One coaching program.
http://www.inventright.com/what-we-offer/bootcamp-coaching

Then if you have any questions, book with us to talk.
https://www.inventright.com/contact

Hello Rushikesh, I would recommend filling a US PPA (Provisional Patent Application). It's only $70 and will give you one year in the US to say patent pending. If there is interest, we can show you how to get the company you sell your idea to (licensee) to pay for the patent. We have had many inventRight students in India. Most focus on the US market as it's easier to license to a US company compared to an Indian company. Don't limit yourself to your geography! Take a look at our bootcamp and consider joining. BootCamp One On One Coaching Complete details on inventRight BootCamp One On One coaching program. http://www.inventright.com/what-we-offer/bootcamp-coaching Then if you have any questions, book with us to talk. https://www.inventright.com/contact
Guest - Tamera cordell on Monday, 02 September 2019 14:10

I really need some help with my idea!! Its the same idea and can be used in two diffrent markets. Im so confused and dont know what to do!! Please can someone call me? I dont know if i need to have two ppas or if one will do and same for the sells sheet.
xxx-xxx-xxxx (phone number deleted to protect poster from unwanted calls)

I really need some help with my idea!! Its the same idea and can be used in two diffrent markets. Im so confused and dont know what to do!! Please can someone call me? I dont know if i need to have two ppas or if one will do and same for the sells sheet. xxx-xxx-xxxx (phone number deleted to protect poster from unwanted calls)
Andrew Krauss on Wednesday, 02 October 2019 09:14

Hi Tamera,

That's fantastic. It's not unusual that a product could be licensed and sold into more than one market. You are not the only one confused on how to move forward and sell your idea to a big company. We can help.

Book with us to talk here....
https://www.inventright.com/contact

I've edited out your phone number from your post above as i'm sure you don't want random people on the internet calling you.

Hi Tamera, That's fantastic. It's not unusual that a product could be licensed and sold into more than one market. You are not the only one confused on how to move forward and sell your idea to a big company. We can help. Book with us to talk here.... https://www.inventright.com/contact I've edited out your phone number from your post above as i'm sure you don't want random people on the internet calling you.
Guest - Fernando Caraballo on Saturday, 14 September 2019 19:32

Hi Andrew do you company make or you have some one make sellshetts

Hi Andrew do you company make or you have some one make sellshetts
Jon Corbett on Friday, 20 September 2019 17:04

Hi Fernando, Yes our Design Studio makes some great sell sheets. They work with both our students and the public. Here is more info about our Design Studio:
https://www.inventright.com/what-we-offer/dspublic

Hi Fernando, Yes our Design Studio makes some great sell sheets. They work with both our students and the public. Here is more info about our Design Studio: https://www.inventright.com/what-we-offer/dspublic
Guest - Michael Denson on Monday, 16 December 2019 11:58

Hello.

My name is Michael Denson, I have been tossing around a so called sleeping dinosaur idea in my head for several years. I just recently found your YouTube channel and love your 10 step approach to licensing Ideas. I also have listend to Steven's book, One Simple Idea. That being said, I would love to speak with someone on figuring out what steps I need to take next, or if your Company is right for my Idea and the industry that it is in. Thank you Andrew and Steven for the inspiration to follow my dreams.

Hello. My name is Michael Denson, I have been tossing around a so called sleeping dinosaur idea in my head for several years. I just recently found your YouTube channel and love your 10 step approach to licensing Ideas. I also have listend to Steven's book, One Simple Idea. That being said, I would love to speak with someone on figuring out what steps I need to take next, or if your Company is right for my Idea and the industry that it is in. Thank you Andrew and Steven for the inspiration to follow my dreams.
Andrew Krauss on Tuesday, 17 December 2019 08:45

Hi Michael,

Thanks for being a fan of our You Tube show. It's great to hear that you are excited about taking action on your idea.

Go ahead and use this link to book with us and we'll call you at the time you book. https://www.inventright.com/contact OR call us at 650-793-1477.

Hi Michael, Thanks for being a fan of our You Tube show. It's great to hear that you are excited about taking action on your idea. Go ahead and use this link to book with us and we'll call you at the time you book. https://www.inventright.com/contact OR call us at 650-793-1477.
Guest - Fran on Monday, 20 January 2020 11:25

I would really need some help. I was wondering how do you approach a company with an idea you would like to license.
Unfortunately, I live in Europe so the call would be very expensive, do you maybe have an email adress for contact.

I would really need some help. I was wondering how do you approach a company with an idea you would like to license. Unfortunately, I live in Europe so the call would be very expensive, do you maybe have an email adress for contact.
Andrew Krauss on Monday, 20 January 2020 16:45

Hi Fran,

We've had inventor students in over 65 countries. You can do this from anywhere. You don't need to meet with companies in person. You can reach out using LInkedIN and the phone. Feel free to email me at andrew@inventright.com if you have any more questions.

Hi Fran, We've had inventor students in over 65 countries. You can do this from anywhere. You don't need to meet with companies in person. You can reach out using LInkedIN and the phone. Feel free to email me at andrew@inventright.com if you have any more questions.
Guest - James on Saturday, 21 November 2020 17:01

How much dose the class cost

How much dose the class cost
Andrew Krauss on Monday, 23 November 2020 14:09

Hi James,

Our One On One coaching program is $3,000 and our Academy program is $900.

Here's links to both
https://www.inventright.com/coachingmenu/bootcamp-coaching
https://www.inventright.com/coachingmenu/bootcamp-coaching

Feel free to book to talk to an advisor about either.
https://www.inventright.com/contact

Hi James, Our One On One coaching program is $3,000 and our Academy program is $900. Here's links to both https://www.inventright.com/coachingmenu/bootcamp-coaching https://www.inventright.com/coachingmenu/bootcamp-coaching Feel free to book to talk to an advisor about either. https://www.inventright.com/contact
Guest - Rishabh singh on Tuesday, 16 February 2021 10:18

Hello Andrew
I have a big idea
So whats the procedure to implant or sell my ideas to a big company.please suggest me what the procedure

Hello Andrew I have a big idea So whats the procedure to implant or sell my ideas to a big company.please suggest me what the procedure
Jon Corbett on Tuesday, 23 February 2021 12:56

Hi Rishabh,

Stephen just did a great video on this. You can learn more here:
https://www.youtube.com/watch?v=uwnEx8V4WrA&t=267s

For more details, here's a link to our book on Amazon. It's called "One Simple Idea"
https://www.amazon.com/One-Simple-Idea-Revised-Expanded/dp/1259589676

"One Simple Idea" is an easy read and will really help you understand licensing and selling your ideas for royalties.

Hi Rishabh, Stephen just did a great video on this. You can learn more here: https://www.youtube.com/watch?v=uwnEx8V4WrA&t=267s For more details, here's a link to our book on Amazon. It's called "One Simple Idea" https://www.amazon.com/One-Simple-Idea-Revised-Expanded/dp/1259589676 "One Simple Idea" is an easy read and will really help you understand licensing and selling your ideas for royalties.
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inventRight is the world's leading expert on product licensing. Cofounded by Stephen Key and Andrew Krauss in 1999, it has since helped people from more than 60 countries license their ideas for new products.

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