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Susan Bellman

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PostSubject: License your product vs. doing it yourself   Fri May 08, 2009 10:12 pm

- License your product vs. doing it yourself. Besides the fact that doing it yourself is much harder work, what are other things to consider?

Can we assign the rights and get a one time payment for the product?

Also, in regards to licensing your product, don't they have long pay out cycles?

Wouldn't I get more without the 'middleman'?

Thanks
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Roger Brown

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Location : South Carolina

PostSubject: Re: License your product vs. doing it yourself   Sun May 10, 2009 7:51 am

Lets take your questions one at a time.

Q:License your product vs. doing it yourself. Besides the fact that doing it yourself is much harder work, what are other things to consider?

A: Doing it yourself requires that you make the product, sell it, inventory it, promote it, set up distribution, take returns, Devote a majority of your time running a business. Most people don't have the right mind set for running a business or the capital it takes to get it up and running.
With licensing, the company that has your product has to do all the above and you receive a portion of the sales profits in the form of royalties. You have very little invested in the product versus the companies involvement.

Q: Can we assign the rights and get a one time payment for the product?

A: Yes you can, but it is more likely they would set you up on a royalty basis. Because if they were to make a one time payment you would want a larger sum up front before they have started selling the product and gotten any return on their investment. Plus, most of time an Inventor asks for a one time payment they are asking for an unrealistic sum that no company is going to pay.
This goes back to the false notion that every idea is worth a million dollars. There are million dollar ideas, but those are rare and no company is going to give you a one time lump sum of one million dollars up front for a product idea that it will take them years to get that return back.

Q: Also, in regards to licensing your product, don't they have long pay out cycles?

A: Most companies pay royalties on a quarterly basis 30 days after the end of that quarter. You have to remember they have to get paid before they can pay you. The companies they sell to may only pay quarterly after returns, credits and other issues are resolved. So you are not first in line for payment.

Q: Wouldn't I get more without the 'middleman'?

A: Yes, but that would put you right back to having to form and running a company which if you are interested in licensing is not your option. You get more forming and running the company yourself, but you are also taking all of the risk and you are the one investing the money in the product. If you have one or two ideas running a company may be the better option for you, if you have a head for business. If you are a serial Inventor with multiple ideas running a company around each idea may be more than you could handle mentally and finanacially.

http://www.rogerbrown.net
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