The final key element of the development journey where your product idea is packaged, checked, shipped and sold to customers, distributors or retailers.
When you have sufficiently developed your product, you will be able to approach retailers. To convince them to buy it, you will need to demonstrate to retailers that your product is of a high enough quality to sell in their shops. The best way to do this is to exhibit pre-production samples: rather than prototypes, these are actual examples of a finished product that have been assembled at a factory after production tooling has been set up. Because pre-production samples require tooling to have been created, they can often be more expensive to produce than prototypes. Retailers often require them, however, so the manufacture of samples can be a worthwhile investment. If you are unable to have samples produced, present a prototype that resembles your finished product as closely as possible.
You will also need to accurately cost, or work out how much to charge for, your product before presenting it. In order to do this, you will need to consider how much the factory at which your product is manufactured is charging for its production, the costs of shipping and packaging your product, and how much you intend to add to these costs in order to make a profit (the product’s mark-up). The combination of these factors will contribute to a final selling price for your product. This will be doubled and VAT added to it to create a retail price, a consideration that needs to factor into your calculations. It is important not to expect to earn too much money from your first sale to a retailer – your intention in selling to them should be to gain exposure for your product through which the interest of other retailers can be generated.
As well as presenting high-quality samples, you will also need to present yourself – as a confident professional who retailers can trust to produce that which you are selling. Pitch training services are available that will help you to convey confidence when pitching to retailers. It may well be worth taking advantage of such services as, often, you will only get one opportunity to make your pitch.
There are two main routes to profiting from your idea:
License your idea to a company who will take responsibility for the manufacturing, distribution and marketing of your product. A license is a contractual right that gives someone permission to use your intellectual property (IP). It allows you, as the holder of IP rights (“the licensor”), to profit from your idea by charging a user (“the licensee”) a fee or royalty to use your licensed IP. Before you negotiate a license agreement, it is important to make sure that you have applied for, or preferably obtained, exclusive rights to the IP you wish to license.
You will only be able to secure exclusive IP rights through the granting of a patent or a trademark, or through design registration. In many cases all three rights can be applicable to a single product. While licensing is likely to be less expensive than setting up your own company, charging a licensee a fee is unlikely to be as lucrative as selling your product directly to customers.
Set up your own company to manufacture and sell your product. Please see page 3 for information on starting your own company.
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