97% of All Patents Never Make Any Money
By Stephen Key | In: Innovation, Starting a Business
Man with a Note and a Word Patent
Did you know that 97% of all patents never make any money?
What? This statistic should baffle you. Why do so many people continue to file for patents if the overwhelming majority of them don’t earn a profit? Where is the disconnect occurring? Because surely, people wouldn’t file for patents if they thought that they weren’t going to make any money. I’ve spent many years studying this phenomenon, trying to understand why so few patents become actual products. And I’ve concluded that there are two main reasons that this statistic is so high—so please, before you file for a patent, read this.
Reason #1 patents don’t make money: Inventors don’t think about how the product will get made
Too many inventors and entrepreneurs let a fear of getting ripped off guide them, a fear that is reinforced by patent attorneys and agents. They are more concerned with protecting ideas than determining if that idea has a potential for market success. Thousands of dollars are spent and years wasted waiting for a patent to file. And what’s the final result? Too often, just a framed certificate that hangs on an office wall.
It doesn’t make sense. What I’ve realized is, most people who file for patents don’t know how their idea is going to be manufactured. They’ve never asked, “Can my idea be manufactured at a competitive price?” Because it doesn’t matter how great your product is—if it cannot be manufactured at a price that is comparable to your competitors’ prices, it will never be made or sold. That’s the bottom line. I’ve met inventors who have determined that their product can be made, but failed to research the price of the product before filing for a patent. If your product is five times more expensive than others on the market, a retailer isn’t going to buy it, even if it improves upon those other products.
If you want to determine if your idea can be made, contact a contract manufacturer through a trade association. They will be able to give you an idea if your product can be made and at what price. Make sure to get a signed non-disclosure agreement or work-for-hire agreement before you reveal the details of your idea.
If you aren’t sure your patented idea can actually be produced, it’s just that: an idea.
More articles from AllBusiness.com:
10 Intellectual Property Strategies for Technology Startups
To Patent or Not to Patent: How to Protect Your Company’s Intellectual Property
These 5 Common Legal Mistakes Can Hurt Your Small Business
Using Patents as Loan Collateral
6 Steps for Using Social Media to Promote Your Invention Idea
Reason #2 patents don’t make money: Inventors don’t connect with potential licensees
The other reason most patents never make any money is because inventors and entrepreneurs cannot, for whatever reason, pick up the phone and start contacting the right potential licensees. They may spend years developing a prototype, but won’t dial. You’re not in the game if you’re not making calls. Even if you think you want to manufacture the idea yourself, it’s a good idea to do some homework. Are companies interested? What is their feedback? Their expert answers will help improve your product and prevent you from spending a lot of money on an unpopular idea.
At the end of the day, every company you work with is going to ask you two questions: How do we make this? And, how much does it cost? Know the answers to these two questions before you begin to consider filing for a patent, and you may end up becoming one of three successful percent!
Liquidmetal Technologies, Inc has never learned how to make a competitive product and it has sucked at sales and marketing.
It takes two to tango, but LQMT has only succeeded to develop a tangle (a MAZE) which doesn't amaze customers, because they have no continuous orders from customers going into the future.
I still have my Miltner Adams knife and still look at it in wonder, and wonder what the eff good it is?
How to move from proof of concept to sales bringing in the bucks.
And the stunning truth of the matter is that this generation, save the military, doesn’t value freedom. Instead, it values comfort. It values convenience and coddling, and conformity.
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