As an inventor, you will face a lot of obstacles while building a prototype of your great idea. A prototype is a good first step. But if you are unable to sell your idea/invention, it will count for nothing. If you do not sell or license the invention, you will end up with a useless patent in your hand, and thousands of dollars spent for nothing.

Inventors, by their very nature, are great thinkers. Some of them, are great doers also. They create a prototype and file for a patent. But, even the doers are very bad negotiators, most of the time. What is the reason for this? Every inventor has a very distorted picture about ownership and profit sharing. Their thought process is, “I created this after so much of thinking and effort, so I deserve the lion’s share of profits”.

Unfortunately, it does not work that way. Think about the manufacturer – he is the one who is taking all the risk with your idea. Even if your idea is great, the final product could fail for a number of reasons, including the economy, market conditions, better product from competitor entering the market, etc. There is a lot of risk in deciding to manufacture a product that has not proven itself in the market.

If the profit margins are big enough, most of the manufacturers will be happy to pay you a reasonable amount of royalty. But if you ask for too much, there may not be enough margins left for the manufacturer to make a profit. The risk to reward ratio will be too high, from their perspective. So, they will just walk out. And you will be left with a great idea, and no product – in other words, 100% of nothing!

So, never be greedy while negotiating with manufacturers – especially if you are a first time inventor.