During the late 1980s, I was introduced to the world of product licensing while working at Worlds Wonder. One of our most successful toys, Teddy Ruxpin, was licensed to Worlds of Wonder. Being part of the manufacturing team, I had the opportunity to attend meetings where we evaluated new product ideas, considering their cost implications. I quickly realized that understanding manufacturing costs is crucial in the product licensing industry.
After leaving Worlds of Wonder, I ventured into my own company, licensing my innovative ideas, primarily in the novelty gifts industry. Back then, there was no internet, and I had to physically visit local stores like Hallmark to study the products on their shelves. To get in touch with companies, I dialed the 1-800 number on the package and asked for the corporate number, reaching out to someone in sales or marketing.
LinkedIn didn’t exist at that time, so I directly asked these individuals if they worked with outside product developers. The concept of open innovation was not widespread, and only a few industries understood its potential. If I received a positive response, I mailed my one-page pitch/sell sheet to the company, along with a picture of my handmade prototype, as there was no 3-D printing or computer graphics then.
In those days, there was no provision for patent applications, and starting in the novelty gift industry, companies were less concerned about intellectual property protection, so they never asked about patents. I had to wait patiently, often receiving rejection letters. But occasionally, I was delighted to receive a letter expressing interest, followed by a contract, and that filled me with happiness.
During that time, the companies I worked with maintained a fair and balanced approach, and the level of competition was relatively milder. Once I became part of the game, they would generously send me catalogs of all their products. This gesture made it significantly easier for me to come up with ideas that seamlessly aligned with their existing product lines.
Today, things have drastically changed. With the advent of the internet, we can create 3-D printed prototypes and computer-generated graphics. Platforms like LinkedIn have made it easier to reach out to people, and studying product lines online has become seamless. Open innovation has led to a surge in product designers like us working with companies.
Despite the ease of access today, the industry has become fiercely competitive, with many more industries embracing open innovation. To succeed at the highest level, one thing remains constant – the importance of understanding the cost of manufacturing. Not every product may require you to focus on manufacturing costs, but understanding this aspect is crucial if you aim to excel in the game of product licensing.
In this article, I’ll reveal valuable tips and strategies to sharpen your skills and maintain a competitive edge in the ever-evolving world of product licensing. Let’s dive in and explore these essential tips together.
Mastering Product Licensing: Tips to Excel at the Highest Level
1. Understand The Cost Of Manufacturing
In product licensing, understanding the manufacturing costs is crucial to ensure your product fits within the retail price point. While companies might need to evaluate these costs on their own, presenting a product that doesn’t align with the target price will likely not work. By comprehending the cost factors, you can design your product to hit the desired price point.
Some experienced individuals in product licensing go the extra mile by providing a bill of materials, detailing how to make the product and its associated costs. Furthermore, the manufacturing process itself may hold valuable intellectual property, which could be an additional advantage for you. By providing such insights, you simplify the decision-making process for companies and gain a competitive edge.
Many innovators lack manufacturing expertise, but you can seek help from experienced professionals on platforms like LinkedIn and hire them. By having them sign a work-for-hire NDA, you secure ownership of what they create.
The number one reason many promising ideas don’t move forward in product licensing is often linked to cost considerations.
Therefore, mastering this aspect will increase your chances of success. Another valuable tip the pros follow in product licensing is to ensure your product stacks up well against the competition.
2. Highlight Your Unique Selling Points Compared To Market Competitors
In the world of product licensing, standing out is key to success. Potential partners often inquire about your unique selling points compared to similar ideas on the market and existing patents.
To make their decision-making process easier, you can supply them with a one-page comparative analysis. Showcasing competing products and their benefits, and then comparing your product against them will highlight your distinctive features and increase the likelihood of them moving forward with your idea.
This is a tactic used by the pros to excel in product licensing.
3. Present A Compelling Package
When you show what your product will look like on store shelves, it can greatly benefit your licensing efforts. By providing an attractive visual of your product jumping off the shelf, along with compelling marketing copy, you help potential partners envision how it will sell in retail.
This not only makes things easier for busy product managers but also positions you as an invaluable asset, essentially becoming an external part of their team. Your efforts play a vital role in helping them sell the idea internally within their company.
4. Smart Intellectual Property Protection
While it wasn’t a major concern in the past, today, intellectual property is essential. Having a well-written provisional patent application will provide perceived ownership of your idea.
It doesn’t necessarily require a full patent, but protecting your intellectual property gives you a competitive advantage and boosts your credibility when approaching potential partners.
5. Prepare A Proof Of Concept
When you have straightforward product ideas, you might not need a prototype. But in some cases, having a prototype is essential to demonstrate how your idea works. Sometimes, industries demand a high-quality prototype. So, be ready for that possibility.
Professional product licensors today may offer both a prototype that looks and works similarly to the final product, as well as CAD drawings to illustrate the manufacturing process.
However, it’s essential to understand that when you’re starting out, creating such advanced prototypes might not be feasible, and that’s completely fine. Focus on refining your idea first, and as you progress, you can explore more sophisticated prototypes.
Final Words
In conclusion, remember that a good idea will always be valuable. Challenge yourself to rise above the competition and understand that the bar will continue to be raised over time. As the industry becomes more competitive, continuous improvement is key to your success in licensing more ideas. Stay motivated and keep improving.
