Phil 2017
New Member
So I have come up with this idea for a product, highly secretive at the moment of course 
and am able to both design it on CAD and produce a prototype. Its a fairly basic design made almost entirely of plastic, so manufactured should be cheap to produce. There is nothing really like it in the marketplace at present so would look to register design and/or patent the product. My concern is what do you think would be the best way to go, my options as I see it are:
1). License the product - I would guess that the product would sell for not less than about £5 each so at 5 percent royalties I would get 25 pence per product sold. My guess is that it could generate steady sales perhaps anywhere between 10,000-100,000 units a year. So would make me between £2500 to £25000 a year before tax. These figures I am estimating I feel are reasonably on the positive side - if the product sells less units than my estimate I will make very little a year. Long term the product has the potential to sell for a long time and sell globally so the long term outlook could be good but large volumes of stock would have to me moved to rise above the paltry sum I'm estimating. I would at the outset not assume the best case scenario of a good long term outlook so I am wondering if only a small volume are sold but continuous for the foreseeable future if I would be better of with a business model that would give me a better return than licensing. I am also dubious if a licensee company would try to do the dirty on me or just not push the product in the right way. I would of course hire a solicitor who deals in this area to draw up the contract however, the whole legal aspect and concept of getting idea in front of a company open to licensing sounds a burden to me. Indeed, even with a IP solicitor present could the company not just rip off my design knowing they have the financial leverage to fight a court case?
2). Manufacture, Market and Sell the product myself. The Manufacture I could go to China and get it produced very cheaply over there and I would imagine it is just the sort of product they would have no problem manufacturing, low tech - no moving parts, basic design, plastic so cheap to produce. So Manufacture not a problem. Sell I could find online places to sell it, Amazon, etc however without Marketing I think sales would be very low. Its the Marketing cost that could be a killer for me here. If I don't sell enough units to cover the Marketing costs (which are likely to be thousands of pounds) then I could really struggle to make this product get the Marketing coverage it needs to sell many units. My concern with this approach is that I might struggle with the input needed to get the product to where i needs to be, i.e the task would be bigger than I could manage to make it a success & quite heavy going on me.
3) Find a partner of some kind to go into this with. So to either form a company with, Venture Capital, Dragons Den type of proposition. This appeals to me somewhat if I can find the right partner to take on the driving the product forward side of things and provide the necessary money to Market the product and deal with this. Hence have a situation not too dissimilar from licensee where I am not burdened down too much with the day to day running of the company other than my stake in the company, profit and assistance where necessary with the business/product.
On the above two business models I am guessing I could make about £1 a unit profit for myself, roughly. Doing it myself though would give me concerns over a company with bigger financial resources than myself ripping my design off. The design being fairly basic would be easy to copy. The main upside is potentially the market for this product might be huge if it caught on as well as I consider it might, but of course its trying to make a small amount of profit of a relatively low priced item. So just wondering what you guy on here would think of as a suitable business model for such a product?
and am able to both design it on CAD and produce a prototype. Its a fairly basic design made almost entirely of plastic, so manufactured should be cheap to produce. There is nothing really like it in the marketplace at present so would look to register design and/or patent the product. My concern is what do you think would be the best way to go, my options as I see it are:1). License the product - I would guess that the product would sell for not less than about £5 each so at 5 percent royalties I would get 25 pence per product sold. My guess is that it could generate steady sales perhaps anywhere between 10,000-100,000 units a year. So would make me between £2500 to £25000 a year before tax. These figures I am estimating I feel are reasonably on the positive side - if the product sells less units than my estimate I will make very little a year. Long term the product has the potential to sell for a long time and sell globally so the long term outlook could be good but large volumes of stock would have to me moved to rise above the paltry sum I'm estimating. I would at the outset not assume the best case scenario of a good long term outlook so I am wondering if only a small volume are sold but continuous for the foreseeable future if I would be better of with a business model that would give me a better return than licensing. I am also dubious if a licensee company would try to do the dirty on me or just not push the product in the right way. I would of course hire a solicitor who deals in this area to draw up the contract however, the whole legal aspect and concept of getting idea in front of a company open to licensing sounds a burden to me. Indeed, even with a IP solicitor present could the company not just rip off my design knowing they have the financial leverage to fight a court case?
2). Manufacture, Market and Sell the product myself. The Manufacture I could go to China and get it produced very cheaply over there and I would imagine it is just the sort of product they would have no problem manufacturing, low tech - no moving parts, basic design, plastic so cheap to produce. So Manufacture not a problem. Sell I could find online places to sell it, Amazon, etc however without Marketing I think sales would be very low. Its the Marketing cost that could be a killer for me here. If I don't sell enough units to cover the Marketing costs (which are likely to be thousands of pounds) then I could really struggle to make this product get the Marketing coverage it needs to sell many units. My concern with this approach is that I might struggle with the input needed to get the product to where i needs to be, i.e the task would be bigger than I could manage to make it a success & quite heavy going on me.
3) Find a partner of some kind to go into this with. So to either form a company with, Venture Capital, Dragons Den type of proposition. This appeals to me somewhat if I can find the right partner to take on the driving the product forward side of things and provide the necessary money to Market the product and deal with this. Hence have a situation not too dissimilar from licensee where I am not burdened down too much with the day to day running of the company other than my stake in the company, profit and assistance where necessary with the business/product.
On the above two business models I am guessing I could make about £1 a unit profit for myself, roughly. Doing it myself though would give me concerns over a company with bigger financial resources than myself ripping my design off. The design being fairly basic would be easy to copy. The main upside is potentially the market for this product might be huge if it caught on as well as I consider it might, but of course its trying to make a small amount of profit of a relatively low priced item. So just wondering what you guy on here would think of as a suitable business model for such a product?