This is a post from linkedin
“To All Members… We Would Like To Start A New Company That Brings Our Inventions To Life, Fairly And Profitably Shared.”
There were about 40 responses to this idea, most inventors responding positively about the subject. The business people a bit skeptical. You can view the entire posting at; http://lnkd.in/8MW2qk
Now I have heard it said that we must have one good idea that this “new company” would have that would make money.
Let’s talk about something real. John, you give us all; your Finger Blade. It looks like we have got about 10-15 people that want to throw there hat in the ring; but let’s make it 10 so the math is easy on me. Let’s make it easy as well and say the Finger Blade is patentable. The patent cost $5,000, so we all need to chip in $500.00.
I have seen the product and I am stretching it if I say that it could sell at $8.00 retail. The “new company” would need to manufacture, merchandise and ship so that the retailer could buy, let’s say Ace Hardware since I have worked with them, at $3.75. I have worked on over 8400 quotes in the last 14 years, so I believe we could get this to Ace and our total cost would be 3.00.
So now we have $0.75 (75 cents) in profit. John, the inventor, would get 20%, $0.15 (15 cents).
The other 9 of us would split the remaining $0.60 (60 cents), for a net profit of $0.066 (6.6 cents) apiece. The first 6,666 units would return our investment of $500.00.
Now how did we get the product made and to Ace? Let’s say we had an angel that put up the $125,000.00 that I project it would cost to get an injection mold, manufacturing, logistics and packaging, these are hard direct cost.So now we have to sell 166,666 units to pay that off.
We will assume that the 9 of us took care of design drawings, prototypes and sales, for our 6.6% of the company. Just for clarification since “John” the inventor gets 20%, the rest of us have to split the 80% that is left. To get even we would need to sell 173,333 units.
Now I have tried to paint a real picture based on my 24 years and 835 products developed for market. My credos are that I worked for Nomaco Inc located here in NC and we had to develop 50-60 new products a year (my department did about 30-40).
Inventing for profit is a business that cost money, period. Maybe not your money but someones.
What I do like is so many people willing to pitch in and help get a product to market. That is what my UMI group and UMI MeetUp is all about. Inventors helping inventors.