Turning an Invention Idea into Money

Pile of Money
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The ways you might make money from your invention fall under three basic paths. You can sell the patent or rights to your invention outright. You can license your invention. You can produce and market and sell your invention yourself.

Selling Outright

Selling your intellectual property patent means that you have permanently transferred ownership of your property to another person or company for an agreed upon fee.

All future commercial opportunities including royalties will no longer be yours.

License Your Invention

Licensing means that you will continue to own your own invention, however, you rent out the rights to make, use, or sell your invention. You can give an exclusive license to one party, or a non-exclusive license to more than one party. You can set a time limit on the license or not. In exchange for the rights to your intellectual property, you can charge a flat fee, or collect a royalty for each unit sold, or a combination of the two.

It should be noted that royalties are a much smaller percentage than most inventors would guess they should be, often under three percent for first-time inventors. That fact should not be surprising, the licensing party is taking a financial risk and it is quite an undertaking to manufacture, market, advertise, and distribute any product. More about licensing in our next lesson.

Do it Yourself

To manufacture, market, advertise, and distribute your own intellectual property is a large enterprise. Ask yourself, "do you have the spirit necessary to become an entrepreneur?" In a later lesson, we will discuss business and business plans and provide resources for conducting your own.

For those of you who do wish to become your own entrepreneur and start and raise capital for a serious business, this may be your next stop: Entrepreneur Tutorials.

Independent inventors may decide hire help for marketing or other aspects of promoting their invention. Before making any commitments to promoters and promotion firms, you should check on their reputation before making any commitments. Remember, not all firms are legitimate. It is best to be wary of any firm that promises too much and/or costs too much.

I Want to Make Money Before I Have a Patent

This is a controversial issue, however, many successful inventors do follow this path. Here are two articles on this topic.

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Bellis, Mary. "Turning an Invention Idea into Money." ThoughtCo, Apr. 22, 2017, thoughtco.com/how-to-make-money-from-invention-1991824. Bellis, Mary. (2017, April 22). Turning an Invention Idea into Money. Retrieved from https://www.thoughtco.com/how-to-make-money-from-invention-1991824 Bellis, Mary. "Turning an Invention Idea into Money." ThoughtCo. https://www.thoughtco.com/how-to-make-money-from-invention-1991824 (accessed October 21, 2017).