The Secret to Determining Your Invention’s Market Value

Most new inventors have great ideas. They see the world and its myriad problems differently than others see it. They are optimistic and almost certain that their invention will not only revolutionize the way that some things are done, but make them lots of money in the process.

Nothing could be further from the truth! Oh, they may be true visionaries and so optimistic that they are delusional, but they will rarely make lots of money from their invention.

Many inventors will see all of their efforts – all of the time, sweat, tears and money that they invested in their invention – come to nothing. It won’t make them a dime. They will end up frustrated and remorseful, invention process. They will place the blame for their failure on those shortsighted people who do not understand the value of their invention.

There are ways to avoid this, and as you all know, several “lucky” inventors avoid this fate every year and become rich and successful. Luck may have something to do with it, but their success is really attributed to proper preparation and understanding the invention process.

One phase in the invention process that will help you determine the value of your invention idea before you invest lots of time and money is initial market assessment. This initial market assessment should be performed as soon as you solidify your invention idea. This is not a full blown market study or analysis, but the results that you find this early assessment will be very useful as you move your invention through both the invention and commercialization process.

This initial market assessment consists of the 4Cs. The 4Cs are:

• Concept
• Customer
• Compensation
• Control
Each “C” is critical, but customer is the most important one. Spend the most time on that one.

The concept should solve a problem. You, as the inventor must have a very clear understanding of the problem that your invention is going to solve. Define the problem in detail. Be as specific as you can.

Define any technical specifications and physical dimensions that you envision at this stage. This information will help you define your customer in the next step. Also discuss your invention’s usability. Is it easy to use? Will it require some prior experience or knowledge to use? These will all be helpful in later stages of the invention process.

All of the answers to these questions may change as you move through the various phases and steps of both the invention and the commercialization processes, but the thought that you put into this now will save you time and money later. Changes are much easier to make when your invention is on the drawing board than they are after you realize that no one is buying your first production runs.

As we mentioned earlier, the second “C”, Customer, is the most important. This is where the rubber meets the road. The more you know about your target customer, the better your chances of reaping the rewards that you envision.

Describe who will buy your invention. Do not assume anything about your target customer. It doesn’t matter if your target customers are individual consumers or businesses. They will buy based on the benefits that they believe they will receive from your invention. Do not assume. The best bet is to go ask them.

Will they buy your invention to save time or to save or make money? Will your invention reduce their risks? Will it improve their image? These are all reasons that customers will buy, but you have to find out. Your customers’ motivation may be totally different than what you think. So ask them.

How do you ask? There is one very simple answer – it depends. It depends on who your customer is and where they will buy your product. Will they buy your product via retail or wholesale? If retail – is it local, a big box like Wal-Mart or Target or some other type of national chain, such as Advance Auto Parts?

Will they buy it on the Internet or from sales reps? These are just a few of the distribution channels that are available? Finding out what your customer wants depends on the distribution channel that works best for both you and them.

The next “C” is the initial market assessment is Compensation. Can your invention, once it enters the market, cover all the costs associated with delivery it to the customer? Can you make money after all of the manufacturing and assembly costs, the sales and marketing fees and commissions, the distribution revenue sharing agreements and any necessary logistics support?

Logistics support includes maintenance and repair, replacement parts inventory, return policies, training and any other associated fees and services that may be required to keep your invention in the hands of a happy customer.

Will your invention earn enough to get an investor excited? Investors, whether amateurs or professionals, seek a return on their investment usually measured in ROI. Does your invention have the potential to deliver a good ROI in a reasonable amount of time?

There are many other compensation related issues, but these are the key ones. Notice, we haven’t mentioned you getting a dime yet, unless of course your invention is 100% self funded, then you should be a very prudent investor and seek a reasonable ROI for yourself.

The last “C” is Control. You can do everything else right, get this wrong and lose it all. Control includes your intellectual property protection such as patents, trademarks, trade secrets and copyrights.

It also includes issues such as your rights in licensing and partnering agreements. You will probably need some type of help to get your invention to market. Just make sure that you don’t lose control unnecessarily while you are getting that help.

All of these 4Cs are critical to your initial market assessment. You won’t know all the answers initially, but thinking about them before you invest years into developing your invention will save you time, money and stress.

Too many inventors and innovators have great visionary invention ideas. They spend time focusing on the technical and performance aspects of their invention only to find out that there is no real market for it. Unfortunately, this sad story happens a lot more than it should. Follow these basic guides and you can make sure that it does not happen to you.