By Russell Williams

Nearly all inventors reach a point where they need to decide how they’re going to commercialize their inventions.manufacturing

Often they’re unaware of the options or assume that inventing requires them to manufacture and market on their own.

Pursuing a less suitable approach for their particular situation can cost time and money.

If you are new to the inventing business or are unsure how an inventor makes money from inventing, consider the following:

Licensing for Royalties

A license agreement is when the inventor [licensor] agrees to let a third party [licensee] commercially use an invention for a period of time. The inventor could receive an ongoing payment called a royalty, which may be calculated as a percentage of sales of the invention, or a one-time payment.

Usually, the company that licenses the invention would manufacture and market it. The likelihood of an inventor striking a license agreement normally depends on having rights to the invention – a patent.

Without patent protection, others legally can make or sell the invention. Companies usually won’t license an invention that’s not patented.

Assigning or Selling the Invention

When inventors assign their rights, they are permanently transferring or selling ownership of the invention and/or patent. Inventors may receive a lump-sum or a series of payments.

The difference between a license and assignment is in the transfer of rights.

With a license, inventors retain rights, like “renting” the patent. With an assignment, they transfer their rights, like “selling” the patent.

Do-It-Yourself Manufacturing

When developing and manufacturing on your own, you take on the responsibility of setting up manufacturing either through domestic or overseas operations. You hire a manufacturing company to produce your product.

While you maintain control of your invention, you also assume the risks and costs. If you manufacture your invention overseas, you should develop an understanding of how you will import, warehouse and distribute your product.

Every invention is different in terms of its complexity and structure. For some inventions, little development and setup is required, which can simplify the manufacturing process.

Other inventions may be much more complex and will need in-depth research, engineering, tooling and molds for mass production.

Manufacturing can be very expensive and usually involves a large set-up fee. Once the invention is ready, there may be a minimum order requirement.

Overseas manufacturing can have added challenges associated with finding and communicating with a foreign company.

Examine all the options and take the invention’s specifics into account before deciding whether to manufacture or license. And remain flexible.

Many inventors start out self-manufacturing, then seek a licensing agreement for their product. The reverse also can occur.

If you fail to land a licensing agreement, you can always consider going the manufacturing route … so long as you have done your homework and have a strong belief in your idea.

Russell Williams is president and co-founder of Invention Home, www.inventionhome.com.