So you’ve got this great idea for a new product invention and you want to commercialize it. You are probably thinking about applying for a patent so that no one will steal your idea, even though you may not even have much money to invest.
In spite of this, you’re ready to tell the world, “I have this great new product that everyone needs to have and will love!” You’re ready to enter the marketplace.
Hold on. Obviously, you should consider whether there are any major barriers ahead. According to businessdictionary.com, barriers to entry are “Economic, procedural, regulatory, or technological factors that obstruct or restrict entry of new firms into an industry or market.”
Examples of barriers to commercialization
In his blog “Dobkin Unleashed,” Jeffrey Dobkin with the American Society of Inventors presents some illustrative examples of barriers that may make your invention commercially infeasible:
- Your invention is not much better than existing solutions to the problem being solved—i.e., it isn’t faster, better, cheaper or more powerful. This would imply that your chance of getting a good return on your investment is reduced. This doesn’t mean that it’s not a good idea; it may just be more difficult to sell.
- Your estimated manufacturing costs may be too high, making it difficult to net a significant profit. Every product has a typical selling price range. Under that price, you may lose the perception of a quality product. Over it, your target customers will most likely opt for competing products.
- There may be no way to exclusively target the people who would be the most likely to buy your new product. You can’t “blanket the world” and advertise to everyone; it’s too expensive.
- Your need to educate everyone about how to use your new product and why it’s better is too expensive.
- Similar products in your market have tied up all distributors to your retail stores and to potential customers of interest in your target market. There’s no way in!
- You don’t have enough money to make it happen and don’t know where to get adequate funding.
Additional considerations for comercialization
Those real-life situations and possible problems are not to be ignored. But there are other considerations.
Patentability and licensing issues. If similar products are already covered by multiple patents and/or licensing agreements, a new product must avoid potential infringement issues. Usually, it is better to seek some form of patent protection, if possible, to establish ownership of something potentially marketable. However, in some cases, patent protection is not essential to successful commercialization. (That said, the prospects for obtaining a license for an unpatented product are very slim, as many manufacturers will not even preview unpatented ideas or inventions.)
Prototype development. A prototype can show manufacturers, prospective licensees and investors what the end result is supposed to be and, as a result, get you the attention you need. But this can be expensive, so you’ll need adequate funding for this. Traditional sources of capital (angel investors, venture capitalists, small business investment companies, investment bankers, etc.) want valid proof of the invention before they invest.
Costs and pricing. This is an important consideration even if you think you’ll have enough access to capital. In the early decision stages, you may not be able to estimate your exact cost to manufacture and introduce your new product into the marketplace, but if you think your costs will be pretty high and you will be competing with relatively low-cost products, your idea will probably not be worth pursuing.
You will have to have an idea of what customers are willing to pay for your new product. The key question is whether your target customers will be willing to purchase your product, given the choices for competing products. Timing and associated start-up costs could be a major deterrent, as it may take a considerable amount of time and capital resource expenditures before you are able to get your initial product versions into the marketplace. Can this new product be produced profitably and offer a reasonable return on investment? If you can’t achieve this, don’t do it.
Government regulations and laws. Many industries have rules and licensing requirements that affect how a business operates and the costs of doing business. Often, the costs associated with meeting regulations and various standards, and achieving necessary permits and licenses, do not make sense for a new business. Dealing with government regulations at the federal, state and local levels could be a real deterrent to trying to develop a new product and enter it into the marketplace.
Although some of these obstacles can be daunting, remember the words of motivational author Sonya Parker: “Don’t be afraid to try something. If it fails, you can always try again and again until you succeed.”
That’s what Edison did.