How to Sell an Idea: Everything You Need to Know
There are many options for those with great ideas who either don’t want to or don’t have the time to start running a company.6 min read
How to Sell an Idea to a Company
If you want to know how to sell an idea, you don't have to be a know-it-all entrepreneur. All you need is inspiration to create the idea and then sell it. But, what if you don’t have the time to dedicate to your idea or brand? There are many options for those with great ideas who either don’t want to or don’t have the time to start running a company.
Option 1: Taking a Quick Payoff
A payoff is when someone signs over the rights to an idea and receives compensation in return.
A payoff is a great option for someone who is already content working a full-time job and doesn’t want to give up the position to run a business. Before going down this route, however, one should get a patent for his or her idea. Without one, someone else can take the idea freely and run with it.
Things to consider when taking a payoff include:
- It may be a good idea to ask the potential buyer to sign a nondisclosure agreement.
- Prepare a prototype of your idea to potential buyers, which can, in turn, increase the price of your idea.
- Conduct a survey, asking 100 people if they would be interested in your idea. For example, if you have a product invention, you may want to ask potential customers if they would be interested in purchasing your product should it be sold in stores or online.
Option 2: Licensing Your Idea
Licensing is when the owner of the idea licenses it to an individual or business but continues to receive a portion of each product sold.
Maybe a quick payoff isn’t ideal in your situation. If this should be the case, licensing the idea might be a better option instead of selling it outright. Consider the following when considering licensing your idea:
If you license your idea, you will receive a smaller initial payment, and then continue receiving roughly between 5-20 percent from each product sold thereafter.
Option 3: Keeping Long-Term Ties
In some instances, people don’t have the time to dedicate to their ideas but want to remain involved in the process somehow, beyond just receiving a regulator royalty check for each product sold. If you fit into this category, you’ll want to play an advisory type of role, influencing any larger decisions on how your product or brand should grow.
You can choose from one of the following two options should you choose to go down this route:
- You can either find a partner (business or individual) to help expand and grow your idea or brand. This partner will provide the funding necessary, as well as manage the day-to-day operations, while you oversee the process.
- You can provide the funding yourself to get your idea or brand started, and hire employees to manage the daily operations for you.
Option 4: Giving the Idea Away
Giving the idea away is another option. This option is best for those who care more about the idea than the money itself. For example, if you had an idea or product that will help those in need, you may prefer to give your idea away to a company that can better expand upon this idea and gets the product to market much quicker than you’d be able to. Even if you choose this option, it is always best to have a contract in place ensuring that all details are referenced to protect yourself from any potential claims that may arise in the future.
Option 5: Sitting Tight for the Time Being
Here is another option for you – waiting. For example, you may be hesitant to launch a company or brand because you don’t have the time. You may not have the time because you have a family to raise or a demanding job that doesn’t allow you the time. But, if you wait it out, you may find yourself in a better position, with the ability to dedicate your time to your idea.
I’m Ready to Sell My Idea - Now What?
So, you’re in a position to sell your idea. What do you do now?
- Be sure that you know the market. In order to do this, you should gather as much feedback as possible from others.
- Conduct surveys, asking random people if they may be interested in purchasing your product should it be sold in stores or online.
- Compile data on competing products to see what else is out there, the top-selling products similar to yours, and the brands selling it.
- Product testing on your idea, involving your friends and family.
- Conduct some legal research on your own to determine whether or not your invention can be patented, or if it can be produced without copyright infringement issues potentially arising on other similar products.
- Think about production. For example, if your invention requires unique materials to be used in making it, you’ll want to consider where your product will be produced.
Pinpoint Your Targets
- Create a list of targets. Keep in mind that most companies may turn you down from the beginning as your idea may not coincide with the business’s platform.
- Consider those businesses that operate in a line of industry that would sell your type of product. In order to do this, you can visit various trade association websites to find member lists.
- Allow the Internet to be your friend. Be sure to conduct extensive preliminary research on finding appropriate contacts for each business. For example, www.hoovers.com is a great database to utilize in your search.
Make the Sale
- When you make the sale, there are no set rules or guidelines to abide by. The sale really depends on your product, your purchaser, and your goals. For example, if you want to license your product, the agreement will have entirely different language than an agreement to outright sell your product.
- The agreement should contain all of the specific details regarding what you and the other party wants.
- Be realistic in your agreement. Don’t set unrealistic timelines or restrictions.
- You’ll want to ensure that you receive as much compensation as you can up-front. Should you be entering into a license agreement, you’ll want to receive the highest percentage you can for the sale of each product.
- The purchaser of the product or licensee (individual purchasing the license from the inventor) won’t want to take much of a risk; therefore, the purchaser or licensee will want to pay you as little as possible and a low royalty percentage.
The Best Ways to Sell an Idea Without Getting a Patent
Getting your product, idea, or brand patented can be a very time-consuming process, and may even take several years to complete; if you can’t capitalize on your creation right away, there are other options available to you, including the following:
If you want to sell your idea without having a patent on the product, another approach is to obtain a provisional patent. In order to do this, you will fill out a form and pay a small fee. Upon doing so, you can now tell the world that your product is “patent pending” and present it to potential consumers. This process protects your invention from being stolen from others.
Keep in mind the following key points:
- A patent protects inventions and not ideas
- A copyright protects creative works
- A trademark protects commercial communications Invention Submission
Another way to sell your invention without obtaining a patent is to submit your invention to a company. With a little research, you’ll find that many companies offer help to inventors for a specific fee. Be mindful of the fees and services offered by each company, as this will vary depending on the business as well as the invention itself. Some companies assist the inventor in obtaining a patent while others will go as far as assisting you in the potential sale of your creation.
Online Idea Submission
Another alternative way to sell your idea is to submit it online, whether it be through a contest or other program. If your idea is then chosen by a customer, you will receive a fee.
Keep in mind that submitting your idea online generally only pays you a one-time fee; however, the plus side is that it allows you to be creative and come up with multiple ideas while getting paid to do so!
If you need help with how to sell your idea to a company or would like to speak to a qualified attorney in this area, you can post your legal need on UpCounsel’s marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.