As an inventor, one is in business – the business of inventing. And in business we should keep in mind that the Buyer’s expectations are always higher than the Seller’s expectations – and as the inventor… you are the seller of your product, and the potential licensee, or outright sale prospect, is the buyer.
So, it would follow that inventors must keep the licensee’s sensibilities and sensitivities in mind when presenting, whether for a licensing deal or an outright sale of your product. Inventors can’t drive the market, but can certainly profit from it!
The caveat is, of course, that if you have a new technology or something never before developed then you’re able to, perhaps, drive market forces – or in the best case you will have created a whole new market!
My son, Randy, manages a pawn shop in the Northwest. He has certainly learned a lot about values and peoples’ expectation of what they should receive in exchange for the item they want to pawn.
One day, Randy told me he learned that there are two types of value:
- Financial value.
- Sentimental value.
Financial value is driven by any number of things. Market forces, negotiated value, appraised value, over stocks (usually a result of market forces and/or a lack of demand for a product), novelty, and among many other forces there is “perceived value.”
This last point, perceived value, is where inventors run into trouble because it bumps up against value number 2, sentimental value.
Sentimental value is basically what something means to you, or the arbitrary value you place on something near and dear to your heart. And how much closer and intimate can you be with something than that thing you conceived of and built a prototype for, and of course want to profit from? And of course the validation you get from friends and family about your latest ‘brilliant’ idea helps increase your perceived (sentimental) value.
So, what to do? For me, it comes down to staying objective about the process. Being objective doesn’t mean you can’t be excited about your new idea/product, only that the reality is you can’t know the actual financial value just yet. The financial value of your product is ultimately determined by the marketplace. And how willing your licensee is to sign an agreement and risk resources to find out if there’s a market demand.
To stay as objective as possible, I run my ideas through four critical questions, a set of criteria, that if I can answer ‘Yes’ to, helps me decide whether or not to develop an idea in the first place. This doesn’t take the fun out the process, it only keeps things real.
Four Critical Questions:
- Are you solving a problem? (How do you know?)
- Are you filling a needed? (How do you know?)
- Are you fulfilling a dream? (How do you know?)
- Can this thing be manufactured and sold at a profit? (How do you know?)
Question number 4 is really the most important question to answer. It answers the the similar question – “Is your idea worthwhile?” In other words is there profit in this thing you want to develop? Can some or all of the interested parties profit from developing and delivering the product or experience?
When you have answered the above questions, developed your idea into a prototype/working model, your due diligence is in full swing and your meetings with potential licensees, or outright sale prospects, will go very smoothly because you will have answered some of the questions they will be asking themselves in order to decide whether or not to engage you and sign an agreement.
Stay excited. Start solving problems. Start filling needs. Start fulfilling dreams. Find a way to develop your next brilliant idea and deliver the experience at a profit.
Image courtesy of “jscreationzs” / http://www.freedigitalphotos.net/