Overview
How to Be the 3%: Proven Steps to Make Your Patent Pay
97% of patents never make any money*, but the smart ones do. In this guide, we reveal the key mistakes innovators make, the strategies successful founders use and practical tips to turn your IP into a real business asset. Patents provide innovators with exclusive rights to their inventions, allowing them to control who makes, uses or sells their product idea. However, simply having a patent doesn’t guarantee financial success; it’s a tool for protecting an idea, not a business plan. It’s a commonly known fact that the majority of patents never generate any income.
This can be a surprising and confusing statistic for many business owners and entrepreneurs who hold patents, but as an expert in the field of patents and intellectual property, allow me to shed some light on why this is the case. The key challenge is commercialisation: finding a market need; developing a viable product and effectively marketing it. For many, the costs of patenting, developing, and marketing may not be recovered if the invention doesn’t gain traction or investment. That said, for those who succeed, patents can be critical in securing funding, partnerships, or licensing deals, and offer a competitive edge in the market. This article looks at the reasons patents don’t work and having learnt those lessons, tries to answer the question, can you make money from patents?
*A recent study conducted by the National Bureau of Economic Research (NBER) found that 97% of patents never make any money.
What are Patents?
Patents are legal protections that grant inventors exclusive rights to their inventions for a set period, typically 20 years. They prevent others from making, using, or selling the invention without permission, providing inventors with a competitive advantage. In exchange, inventors publicly disclose details of their invention, fostering further innovation once the patent expires. In order for a patent to generate revenue, the product needs to be developed and marketed to potential customers. Patent Attorneys will encourage start-up businesses and inventors to file a patent as the first step towards making money.
Though there is some wisdom in this, a patent is not the only thing necessary to yield profit from a design, and this crucial point is one that professionals often neglect to tell prospective clients. Even if you are taking the supposedly straightforward route of licencing an idea (See my video for why Licensing An Idea is almost Impossible), beware of the extra costs for making a prototype and the thousands of pounds to pay in legal fees, which could leave you tens of thousands of pounds out of pocket. Fortunately, I am here to tell you how to make money rather than just spend it.
How to Market a Patented Product
Marketing a Patented Product to Consumers
Having a patent doesn’t sell a product on its own. You need to build a marketing strategy that highlights the problem your product solves, why it’s different, and how it improves customers’ lives. Start by defining your target audience and creating a strong value proposition. Build a landing page focused on the benefits of your patented innovation, with clear messaging like “Patented Technology for [specific customer problem].” Use SEO to rank for product-specific keywords and back this up with PR campaigns, social media content that shows the product in action and email marketing to nurture interest. Gather early testimonials, offer pre-orders and create a steady stream of content that educates your audience and builds trust.
Marketing a Patented Product for a Licensing Deal
If your goal is to license your patented product, your marketing approach needs to target the decision-makers in potential partner companies. Start by identifying companies that operate in your product’s sector and create a short pitch deck that explains the problem, your solution, and the commercial opportunity. Include visuals, key data and the unique features of your product that the patent protects. Focus on the market potential, sales projections and why licensing your IP makes sense for the partner. Reach out directly to innovation managers, product directors or business development teams on LinkedIn or via email. Attend trade shows where potential licensees are active and prepare to showcase prototypes, samples or case studies. Follow up consistently with clear, professional communications that demonstrate the patent’s commercial potential, not just the technical features.
The Reasons that most Patents Don’t Make Money
To give you a bit of insight: patent applications to the IPO increased by 7.3% and design applications by 8.9% between 2019 and 2020. And in the following year, TM applications reached a record high of a whopping 137,035; but despite this increase in activity, only 3% of originators actually make money from their designs.
I’d like to tell you why, and how to avoid being part of the 97% of innovators who don’t make money from their patents.
Reason 1 – A lot of patents are not filed to make money, rather to stop other companies from undermining the market share of existing products. Instead of manufacturing a product, Research and Development teams will file patents to protect the money that they have spent on developing, tooling, and managing the quality control of an existing product. We’ve all seen those car adverts where the company boasts about the number of patents they’ve filed on a single car. When in actual fact, it is more likely that these patents were filed to boost their marketing claims than to develop new technology that they are advertising in the vehicle.
Reason 2 – Sadly, I have seen plenty of ideas fail to make money purely because the originator isn’t properly prepared for the next steps after a patent. My team and I use a 10-point validation plan to help reduce the risk of failure in the process of developing a new project. Taking these steps and planning ahead will help to prevent developing an idea that has a low chance of succeeding in the market. One of the main problems that entrepreneurs have is that they fall into the trap of believing that their product will sell itself. This is not the case. The best way to prepare, is to work on your route to market and outreach strategy before investing in a patent. An entrepreneur should be revising a plan for every step of the design process, manufacturing and marketing of the product, as well as leaving room for changes and future demands.
Reason 3 – Another issue I come across is often, investors will get bored of one idea, and move on to the next. Lots of patents receive grant and then they are abandoned. In my experience from helping hundreds of entrepreneurs and SMEs launch new products, once they receive the initial results they’re after, designers will quickly move on. It saddens me to see such brilliant ideas left on the shelf to collect dust. However, if an idea is well considered and suitable for the market, you will be able to make money from that patent. When a successful design or invention has multiple uses and potential for improvement, development of that product can continue which will allow you to create more patents in the future.
Reason 4 – Only a third of all patent applications get granted, and the reason for this is either: because the idea already exists, has already been patented or is too similar to a protected idea, thus doesn’t fulfil the requirements for a new patent. It is highly recommended that you research your concept thoroughly before applying for a patent, to provide a better chance of an Examination Team granting your request. We advise using a reputable attorney to put forward your application to ensure the best outcome (contact us for recommendations). The only way to make money from a patent is when it has been granted, and considering only two thirds of patents receive grant, it becomes clearer why just 3% of patent holders earn money from them!
Read on to learn the lessons and find out how patents do work to make money.
How Do You Make Money From a Patent?
- Licensing: Inventors can license their patent to another business, allowing it to produce, sell, or use the invention in exchange for royalties or a licensing fee. This provides a revenue stream without the inventor needing to manufacture or market the product themselves.
- Manufacturing and Selling: With exclusive rights, patent holders can manufacture and sell their invention, potentially capturing a market without competition. This can lead to significant profits if the product succeeds.
- Attracting Investors or Partners: Patents demonstrate innovation and can attract investors or strategic partners who see potential in bringing the patented product to market.
- Selling the Patent: Inventors can sell their patent outright to a company interested in using or developing the invention, providing immediate financial gain.
- Creating a Competitive Edge: Patents can offer a monopoly on a product, preventing competitors from entering the same space, which can be commercially valuable.
However, making money from patents often requires additional effort, such as market validation, developing a product people want, marketing, and navigating the commercial landscape.
How Much Can You Sell a Patent For?
The value of a patent can vary hugely depending on a range of factors. Some patents are sold for as little as £5,000, while others fetch upwards of £500,000. A lot are entirely worthless as we’ve explained already. In rare cases, when the patent protects a breakthrough technology in a fast-growing market, it may even sell for millions. However, these big wins are the exception rather than the rule.
Most patents are sold for modest amounts, and the price depends on how commercially valuable the idea is, whether it has been granted, and how much work has been done to prove the concept. For example, a granted patent with a prototype and early sales data is far more attractive to buyers than a basic idea on paper. The more risk you’ve removed for the buyer, the more valuable your patent will be.
It’s important to remember that selling a patent is not like selling a finished product. Buyers are looking for ideas they can commercialise quickly and profitably. If you have validated your idea, proven demand in the market and demonstrated how it could make money, you are far more likely to achieve a higher sale price for your patent.
While some innovators sell their patents directly to companies, others work with brokers who specialise in matching creators with potential buyers. These brokers can help negotiate the best deal but will typically take a percentage of the sale price as a fee.
The key to selling a patent for a good price is preparation. You need a clear business case, a strong technical foundation and a proven market opportunity. Without these, it’s unlikely that a buyer will pay a premium for your idea, even if you hold the legal rights to it.
How Much Do Inventors Make From Patents?
Most inventors don’t make a penny from their patents. In fact, around 97% of patents never generate any income at all. It’s a tough reality that many inventors don’t expect.
But for the 3% of inventors who succeed, the potential earnings can vary massively. Some inventors earn a few thousand pounds a year from royalties or licensing fees. Others, with the right market fit, a well-developed product, and a strong commercial strategy, can make hundreds of thousands or even millions in revenue. The key difference is not the patent itself, but the ability to turn that protected idea into a product that customers want and are willing to pay for.
Ron Hickman, the inventor of the Black & Decker Workmate, earned a royalty of £1 for each unit sold. By 2011, over 70 million Workmates had been sold worldwide, resulting in substantial earnings for Hickman. His success with the Workmate allowed him to retire in 1982 and move to Jersey in 1977, where he designed and built his own villa. Hickman’s journey underscores the potential for inventors to achieve significant financial success through effective patenting and licensing strategies. Find out more here: Independent Newpaper article on Ron Hickman
Who Buys Patents?
There are several types of companies and individuals who buy patents. Large corporations often buy patents to expand their product range, protect their existing market position or gain a competitive edge. These companies might include major tech firms, manufacturers or consumer brands who want exclusive rights to a new idea.
Patent brokers also operate in the market, connecting inventors with potential buyers. These brokers specialise in finding the right match and often work on commission, taking a percentage of the sale price.
In some cases, investors and venture capitalists buy patents as part of an overall strategy to build a portfolio of valuable intellectual property. This is common in fast-moving industries like technology, where patents can form the foundation of a company’s value.
Occasionally, small businesses or individual entrepreneurs buy patents if they see an opportunity to commercialise an idea themselves. One of our clients bought the rights to a moulded leaf spring concept and went on to build the technology into knee pads. They have sold hundreds of thousands of these and even ended up with a license agreement with Catepillar: RedBack Kneepads Case Study
The key is understanding what buyers are looking for. They aren’t just buying an idea—they’re looking for an idea that’s ready to make money. That means patents with a working prototype, market validation, and a clear commercial path are far more likely to attract serious buyers.
How Do You Turn an Invention Into a Profitable Business?
Turning an invention into a profitable business takes much more than just having a great idea. It’s about building a complete, validated product that solves a real problem for customers and then creating a strategy to sell it.
The first step is market validation. You need to know that your idea solves a problem that people care about. That means speaking to potential customers, testing your assumptions and refining your product based on feedback.
Next, develop a minimum viable product (MVP) – a simplified version of your invention that demonstrates its value. This is often where many inventors get stuck. They focus too much on perfection and too little on testing the market.
Once you have proof that your product is needed, you need a commercial strategy. This includes working out how you will make and sell your product, pricing it properly, building a brand and finding the right sales channels. Will you sell direct to consumers, wholesale to retailers or license your idea to someone else?
You also need to think about funding. Developing a product, filing a patent, and marketing it all costs money. Whether you raise investment, bootstrap, or crowdfund, having a clear plan for funding your business is essential.
Finally, you need to build a team and processes to support growth. A successful business isn’t just about a single product, it’s about having the right people, systems and strategy in place to deliver that product to customers and keep improving it over time.
It’s not easy, but it is possible. The inventors who make it work are the ones who treat their invention as the first step in building a business, not the final goal.
How D2M can help with Making Patents Work to Maximise Your Profits
Filing a patent is the easy bit. With enough money, you can pay an attorney to do all the work for you. However, the difficult – and most important part – is developing your idea into a profitable, sought-after product. Even then you need to market your product and sell it effectively to start securing money. By the time your product reaches the market, you might have spent between £30k to £1 million, possibly even more! To pay back your investment and start making money from your patent, you need to sell a lot of products. Planning is key, or at least creating an investment strategy if you don’t have the means to fund an entire project launch.
Feel free to contact our product design agency to receive professional guidance on filing and using a patent, or advice on your idea before applying for a patent grant. We want you to have the best chances at success with your patent and give you the knowledge and tools so that you can use that patent to your advantage. No more wasting time and (lots of!) money on a patent that will soon fall through.
Making Patents Work to Maximise Your Profits FAQs
How much can you sell a patent for?
The value of a patent depends on the idea, the market, and how much work you’ve done to develop it. Most patents sell for between £5,000 and £500,000, but rare patents in high-demand industries can sell for millions. To get a good price, you’ll need more than just a patent, you’ll need market validation, a prototype and a clear path to commercial success.
Can you make money from a patent?
Yes – but only if the product solves a real problem, reaches the market effectively, and is protected by a strong, relevant patent strategy.
How much do inventors make from patents?
Most inventors never make any money from patents. Around 97% of patents generate no income at all. However, for the 3% who succeed, earnings can range from a few thousand pounds a year in royalties to multi-million pound deals if the invention takes off in the market.
How much can you earn from a patent?
It varies massively. Most patents earn nothing, but successful ones can generate thousands to millions through licensing, product sales, or royalties. Your earnings depend on market demand, execution, and how well your product solves a real problem, not just the patent itself.
How do you make money from a patent?
You can make money from a patent by licensing it to another business, selling it outright, using it to attract investors or building a business around the invention yourself. The key is to have a strong product-market fit, a clear commercial strategy and the ability to execute.
Conclusion
- Validate the Market Need: Before investing heavily in a patent, conduct thorough market research to ensure there is genuine demand for your invention. Engage with potential customers, test assumptions, and refine your idea based on feedback.
- Develop a Strong Business Plan: Patenting alone doesn’t generate revenue. Innovators should have a clear plan for commercialisation, including production, sales, distribution, marketing, and customer acquisition strategies.
- Consider a Minimum Viable Product (MVP): Before pursuing a patent, develop a basic version of the product to test market demand. If it resonates with users, then investing in patenting may be justified.
- Explore Licensing Opportunities Early: Licensing the patent to established companies can allow inventors to monetise quickly by earning royalties or fees, without needing to manufacture or sell the product themselves.
- Build Strategic Partnerships: Partnering with manufacturers, distributors, or other key players can increase market reach, reduce costs, and improve the chances of commercial success.
- Seek Professional Guidance: Engage with patent attorneys, business mentors, or experts in your industry to ensure you are making informed decisions regarding your intellectual property strategy and business development.
- Be Ready to Pivot: Be open to modifying your invention or shifting your approach based on market needs and technological trends. The ability to adapt is often crucial to commercial success.
- Focus on Marketing and Sales: Even the best product ideas need effective marketing and sales strategies. Invest in branding, outreach, and sales channels to reach your target audience.
- Manage Costs Wisely: Filing and maintaining patents can be expensive. Consider the scope, geographical reach, and type of patent to avoid unnecessary expenses.
- Build a Competitive Moat: Ensure your invention offers a unique, hard-to-replicate advantage over existing solutions, making it more appealing to customers, partners, or acquirers.
By combining a strong product market fit, strategic partnerships, adaptability, and a focus on execution, innovators stand a much better chance of turning their patented ideas into profitable ventures.
Your takeaway message… it is totally possible to make money from a new idea that you have patented, and you should! We’ve seen people turnover upwards of £1 million every year, even from small consumer product ideas that take no more than a few hours every week of their time to profit from. We’ve also seen small businesses grow into large companies as a result of investments into new patented products. This could be you! But remember, you need more than just a patent.
