As a faithful follower of inventRight’s content, you should now understand what exactly licensing is. As a quick reminder, and in its most basic term, licensing is the renting of an idea. As stated in Stephen Key’s (inventRight’s co-founder) December 2017 article (https://inventright.com/help/blog/what-is-licensing), “When you license your idea, you give a company with a lot of powerful resources the privilege of bringing to market in exchange for compensation, aka royalties.”
When you reach out to a potential licensee with your idea, your inventRight coach will tell you exactly what to say, when to say it, and how to say it. It is a very linear process which in our 20 years of coaching and mentoring inventors, we have been through literally thousands of times.
When licensing a product, we leverage a licensee’s manufacturing, marketing and distribution capabilities, just to name a few. So when we ask a company if they are interested in licensing our product, are we not essentially stating to them, “Hey I’ve got an idea. I don’t want to do any of the work. I want you to take all the financial risk and I want to use your company’s resources while I sit back and work on something else”?
Wow that’s a heck of an ask, isn’t it!? Of course, you won’t literally say that to them, but make no mistake… that is precisely what we are looking for!
So how do we get a company interested? How do we weather what must be a perfect storm for a licensee to say ‘yes’? I believe you must limit their risk. Their financial risk to be more exact.
The following four criteria are what I have coined ‘MOPS’. I believe that for first-time inventors or anyone completely new to licensing, if you can hit each one of the below criteria, you will put yourself in not only a very good position to get a ‘yes’, but will undoubtedly limit the licensee’s risk in investing in you.
I have been sharing the following with my students for quite a while now, but have never shared it publicly.
However, after much trial and error, I have concluded the following is critical for first-time inventors to consider.
M: Mass Market
Simply put, the larger your target audience, the better chance your product has to sell significant quantities. The more people that share the problem your product solves, the better your odds of licensing are. This of course limits the licensee’s risk. If a licensee enters a market that is too niche, they could be taking a very costly gamble. Mass markets such as pet, housewares and kitchen are so vast that taking a shot in that category is not an unknown. So, can you invent for a market that includes most of the population?
O: Only a Couple to No Moving Parts
Moving parts (any parts really) add cost. Every product will require some level of tooling. However, if we can limit the amount of tooling or the number of injection molds, we will certainly limit the financial risk for the licensee. Fewer molds equals less development costs. So, can you simplify your product?
Plastic is easily sourced and what a majority of products are made of. Generally, plastic is the easiest substance to work with and of course the cheapest from a manufacturing standpoint. Avoid expensive alloys or new and innovative substrates which will likely cost your potential licensee much more than plastics. So, can your high-end product be simplified and manufactured with more cost-effective materials?
It should go without saying that the smaller your product, the less it will cost to manufacture. Further, your licensee and its retail partner would much rather fit 20 unite of one SKU (stock-keeping unit) on a shelf as opposed to only a few. Additionally, smaller products are cheaper to ship and easier to package. We always aim to think big, but when it comes to your product consider going small if possible.
The ‘MOPS’ acronym is really intended for first-time inventors or anyone just learning about licensing. If you are highly experienced, you don’t have to hit all of these criteria, or even any of them! However, for first timers, I believe following this plan is critical! Why? Because all inventors have ideas that are near and dear to them. However, coming up with the idea is just the tip of the iceberg when it comes to licensing.
Have you looked at your invention/product from the eyes of potential licensees? Is your product worth the risk and investment? Have you thought about how you are going to limit their risk? If you are new to this, perhaps you haven’t. When you think of your next product consider using the ‘MOPS’ system and let’s see what we can do to cut the risky business!