How much do inventors earn with license fees

Earn money with your own invention

Having a good invention is nice, but it's even better to make money from it. Here I would like to give you an overview of the possibilities.

Photo: Dirk Brunner; License: CC BY SA 3.0

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Let's start with a great invention: “Invisible headphones”. The inventor has the idea of ​​conducting sound to the ear via bone conduction. With such an invention, it is important to determine whether patent protection or other protective rights are possible. It is also important to clarify which financial resources are available.

Business plan for the invention

A (small) business plan is the next step. Fundamental questions are clarified there with the inventor.
Every business plan must contain at least the following:
● Customer benefits
● Market analysis
● Competitive analysis
● Target market
● Entrepreneur team
● Marketing and sales
● Financing
● Realization plan
● Opportunities and Risks

The desires of the inventor are also to be considered and must be considered. The economic viability of the idea is questioned in the business plan. There are many excellent inventions that do not make money. Sometimes inventors are not impressed by a business plan, but this approach gives the invention a basis for further development of the idea. I am now going to introduce you to a few options.

Option: sell your invention

If the inventor does not want to set up his own company, it is possible to sell the invention. Property rights such as a good patent are advantageous, but do not have to be. The invention is even more valuable if
● The right buyer is found.
● There is a high level of customer benefit.
● There is a large market volume.
● The technical problems have been resolved.
● A prototype exists.
● The invention is presented professionally.

The more points that apply, the more money the inventor can expect from the buyer. The drafting of the contract for the sale of the invention is done by lawyers. Here, a handover time is usually agreed in which the inventor helps the company with the implementation.

An invention is sold within a reasonable time frame and the inventor can devote himself to further inventions.

Option: build your own company

Photo: Dirk Brunner; License: CC BY SA 3.0
If the inventor wants to set up his own company, he must ask himself the following questions:
● Does he have the professional qualification to lead employees?
● Would he rather keep inventing or build a company?
● Is he aware of what is involved in setting up a company (search for personnel, bureaucracy, required capital, etc.)?
● What role does he want to play?

The strong identification of the inventor with the company is usually an advantage.

Option: cooperation with other companies

If the inventor shuns the risk of founding a company and does not want to completely surrender the idea by selling the invention, he can seek cooperation with a company. A property right is of particular advantage here. In this case, the inventor can agree with the cooperating industrial company that he will continue to provide technical support for the invention. The company has an expert in-house and the inventor has a company on hand.

If this team works well together, a win-win partnership is created for both sides.

Many fail without a strategy

Photo: Dirk Brunner; License: CC BY SA 3.0
If you do not have clear thoughts about your invention from the start, but simply work into the blue, the following can happen:
● You realize too late that the invention is economically worthless and have lost a lot of money and time.
● After you have let off steam with technology, it becomes clear to you that the market has overtaken you with new developments. You were too slow on your own.
● You have developed the invention to an (expensive) prototype and do not know what to do next.
● You have finished developing your invention and realize that you have developed it past the customer.
● You realize too late that you have not considered important points such as service, sales, growth.

The later it has to be changed, the more expensive it will be.

License sale

With our inventor, it turns out that selling licenses is the best option. In order for this to work properly, the following tasks must be completed.
1. Build a prototype
2. Apply for a patent
3. Identify eligible companies
4. Prepare the presentation

Financial medium

Photo: Dirk Brunner; License: CC BY SA 3.0
Our inventor has no financial means for the prototype. He can pay for the patent himself. In this case there are (EU) funding programs, business angel and the possibility of cooperation with an industrial company. Money from friends and acquaintances is also an option. In the case of a cooperation with a company, the latter can later utilize the invention accordingly, depending on the contract.
Our inventor chooses the rich aunt and we keep our imaginary fingers crossed for him.

Typical questions and decisions

1. Can the invention be used profitably? This emerges from a (small) business plan. If not, the invention is discarded.
2. If property rights (e.g. patent, utility model) are possible, consider this.
3. Are there sufficient funds of your own? Most of the time this is not the case. Options are: (EU) funding programs, business angel, cooperations, rich acquaintances
4. How should the invention be brought onto the market and how money should be made with it? Options are: setting up your own company, granting licenses, cooperations.

This was an exemplary example and an overview of the possibilities. But please let an expert advise you.

Every invention and every inventor is unique.

Talk to us.