Need Help? 1-800-701-7993

6 minutes reading time (1104 words)

Show Me The Money! How Much Can You Make From Licensing Your Idea?

40798636 sHow much money can you make from licensing your idea? Someone asked me this question recently. In fact, some folks wanted to know if I can bring inventRight students onto my videos and seminars so they can share how much money they’re making.

I haven’t gotten this sort of question in a long time and I doubt that I can answer it to anybody’s satisfaction but I’ll try.

 First of all- let’s get this clear- that information is personal and confidential and most people don’t want to share it with you. In fact, they don’t want to share it with me! They don’t want to share it with anybody.  And I don’t blame them. It’s like asking somebody, “How much do you make a year?” or “Can you show me your tax return?” It’s a personal thing. So, I can understand why some people don’t want to share that information. I’m sure that you can too.

However, I’m not like most people. I’m willing to share information! Here’s my first reveal: After I created the

and licensed it to a toy company, it sold for about 10 years. By the way, I had no intellectual property protection whatsoever. My prototype cost about $10 to make. The first year I collected close to $100k in royalties, and I shared those royalties with my partner in Stephen Marcus Toy Design, Russell Hicks. And I should insert here that Russell, an incredibly talented artist, had nothing to do with the Wall Ball whatsoever.  But he was my partner in the business, and I was happy to share the income. It was the right thing to do. It was a good product: the toy company expanded the product line to include versions with Penny Hardaway and Grant Hill, two rising NBA players.  There were also versions made for use on cereal boxes! That was all years ago but it was my first deal and I’m proud about that idea and I like sharing it.  The last royalty check I received, which I never cashed, was for $0.55.  I have it framed on my office wall.

The second example I have is my “big idea”, the Spin Label. It’s made me a few millions over the years! Now, realize that it’s been selling on and off for 20 years, and I’ve been collecting royalties or minimum guarantees all that time. Some years, the minimum guarantees were a $250K and some years the minimum guarantees were $750k. It added up to a lot of money and I’m willing to tell you that. Eventually I sold my patent portfolio, trademarks and all of my rights to that product.  It was very good run.

My last example for you is a small dart I created with a suction cup at the end, called Sweet Darts. I didn’t build a prototype and I didn’t file any intellectual property whatsoever. I submitted the idea using only a drawing. This product earned $10k. It sold for one year and one season only, Valentine’s. It never sold again! That was it! And that’s why seasonal novelty products run the risk of a short life span.

Typically, you get paid once a quarter from a licensing contract.  One of our coaches recently received two checks in the mail from his contracts. One of them was pretty large! He was very happy because he told me the amount. I said, “Hey, can I share that with everybody?” and he said, “No.” I said, “Well, why not?” and he replied: “Because in my contract it says I cannot talk about my financial reward or royalties to anybody.” Yes that’s right- it was in his contract. And that’s the way it is sometimes.

You have to realize that asking someone about revenue from a licensing contract is personal.  My best friend is a farmer.  I once asked him how many almond trees he had planted.  He looked a me and said “That’s private - famers don’t share that because then you would know how much money I am making every year”.

Another inventor I know who created Zip It –an inexpensive but clever device to clean shower and sink drains - has made millions. Is he going to tell me how much exactly how much he makes a year? In fact, he did! But can I share it with you? No, it’s private and it should be.

I’m glad people are asking about income but here’s the reality of the situation. If you’re creating products, being a product developer, being an inventor – and if you’re doing this because of the money you think you might make then you are doing it for the wrong reason. I can tell you that right now. If you’re doing this because you think it’s the lottery ticket, you’re doing it for the wrong reason. If you’re doing it thinking you’re going to make millions and live on the beach, you’re probably doing it for the wrong reason. Does it happen? Yes. Does it happen to everybody? No. Does everybody who starts a business, succeed? No. Businesses fail every day.

The point is this: love it. There, I said it. Love it. Love being someone that creates. Love the whole process and don’t quit your day job. You can do this on the side and see how it goes. And don’t ask how much money others are making!

One last thing: what is the average income from licensing? There is no such thing. I’ve seen some people make $10k a year and some people make $50k, I’ve seen some people make a couple hundred thousand, and I’ve seen someone make a million dollars a year for years, so I’ve seen the whole range. “How long does it take to get that kind of money?” People ask that all the time. “Can I start making money the minute I get a licensing deal?” No. It doesn’t work that way. The company has to manufacture the product, they have to ship it, it has to get on the shelf, and then it has to sell!! After the end of the quarter, if your product has sold, you might get a check.  Then you wait for the distribution to grow and the sales to increase. You’re talking one year, a year and a half, two years until those royalties really start to add up. That’s the bottom line.

Hopefully this has all been helpful, although I know it may not be exactly what you wanted to hear. That’s the best I can do at this point! Keep inventing, keep submitting ideas, and keep creative.

 

 

 

Walk Before You Run! The First Step Every Inven...
Royalty Rates - How to get a Higher One!

Related Posts

 

Comments 4

Guest - Jason on Friday, 09 February 2018 19:35

It's true - for me it's not about the money. If it was, I would not be nearly as creative and open-minded! Inventing is a fun hobby that may supplement income and may someday eliminate the need to work a full-time job.

After following the process you teach (design patent, CAD renderings, sell sheet) I licensed my first product! It took about 6 months from reaching out to companies to licensing and seeing my product on the market, which is I believe an unusually fast time-to-market.

If I make close to $10k/year from my first product... I'll be thrilled! That's a great side income for a relatively small time investment and some fun & creative learning along the way.

I'm curious if there is a "typical" number of years that successful products live on the marketplace and remain profitable for the inventor. I'd guess maybe 2-5 years, with plenty of exceptions. What have you typically seen?

It's true - for me it's not about the money. If it was, I would not be nearly as creative and open-minded! Inventing is a fun hobby that [i]may[/i] supplement income and [i]may[/i] someday eliminate the need to work a full-time job. After following the process you teach (design patent, CAD renderings, sell sheet) I licensed my first product! It took about 6 months from reaching out to companies to licensing and seeing my product on the market, which is I believe an unusually fast time-to-market. If I make close to $10k/year from my first product... I'll be thrilled! That's a great side income for a relatively small time investment and some fun & creative learning along the way. I'm curious if there is a "typical" number of years that successful products live on the marketplace and remain profitable for the inventor. I'd guess maybe 2-5 years, with plenty of exceptions. What have you typically seen?
Andrew Krauss on Tuesday, 13 February 2018 10:16

I'm so happy for you Jason. You followed the inventRight approach and licensed your first product!

The number of years a product lives in the marketplace can vary tremendously. It's impossible to predict how long a product will sell. It could be one year or it could be fifteen. Of course how many products sell for fifteen years? A few, but not many.

Some products trickle along consistently for a really long time. Others come in with a big bang for a couple years and then something comes out in the marketplace that makes your product no longer viable.

It's not just the number of years your products sell's, but how well it does during the years it's on the market. So a product selling for only three years could sell much more volume than a product that sells for ten years.

So, yes a lot of products last 2 to 5 years, but plenty last longer and some fail right out of the gate within the first year.

In the end, the beautiful thing about licensing is that all the financial risk is on your licensee and not you. As well as all the work.

Keep going and license another and another!

I'm so happy for you Jason. You followed the inventRight approach and licensed your first product! The number of years a product lives in the marketplace can vary tremendously. It's impossible to predict how long a product will sell. It could be one year or it could be fifteen. Of course how many products sell for fifteen years? A few, but not many. Some products trickle along consistently for a really long time. Others come in with a big bang for a couple years and then something comes out in the marketplace that makes your product no longer viable. It's not just the number of years your products sell's, but how well it does during the years it's on the market. So a product selling for only three years could sell much more volume than a product that sells for ten years. So, yes a lot of products last 2 to 5 years, but plenty last longer and some fail right out of the gate within the first year. In the end, the beautiful thing about licensing is that all the financial risk is on your licensee and not you. As well as all the work. Keep going and license another and another!
Guest - Faith Bouchard on Wednesday, 25 April 2018 20:33

I will be getting royalties from a toy I invented , right now its in development, but I have other inventions I need to put money into. So I would like to sell my percentage in my product , is that possible and if so, what would I sell my percentage for and where could I sell something like that?

I will be getting royalties from a toy I invented , right now its in development, but I have other inventions I need to put money into. So I would like to sell my percentage in my product , is that possible and if so, what would I sell my percentage for and where could I sell something like that?
Andrew Krauss on Thursday, 26 April 2018 07:17

Hello Faith,

My recommendation would be to license this second product just like you did for your toy. That would be the best way to get a percentage of every sale.

Please book to talk to us if you have more questions or need to clarify your goal. We are here to help. Book here and we'll call you at the time you book. http://www.inventright.com/contact

inventRight Co-Founder
Andrew Krauss
650-793-1477

Hello Faith, My recommendation would be to license this second product just like you did for your toy. That would be the best way to get a percentage of every sale. Please book to talk to us if you have more questions or need to clarify your goal. We are here to help. Book here and we'll call you at the time you book. http://www.inventright.com/contact inventRight Co-Founder Andrew Krauss 650-793-1477
Guest
Friday, 22 February 2019

Captcha Image

About Us

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.

Contact Us

1-800-701-7993 (U.S. & Canada)

1-650-793-1477 (Alaska, Hawaii & International callers)

Skype - inventright

Email: andrew@inventright.com

Stay Connected

Image
Image

Copyright © inventRight, LLC. All Rights Reserved.
inventright, LLC. is not a law firm and does not provide legal or patent, trademark or copyright advice.
Please use caution when evaluating any information, including but not limited to: business opportunities; links to news stories; links to services, products or other web sites.
No endorsements are issued by inventright, LLC., expressed or implied. Depiction of any trademarks/logos does not represent endorsement of inventRight, LLC,
its services, or products by the trademark owner. All trademarks are registered 
trademarks of their respective companies.
Read the full disclaimer here. Read our Privacy Policy here.

sucuri

Cron Job Starts