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Is knowing manufacturers cost important if licensing?

Postby AmrTen » Tue Aug 03, 2010 6:16 pm

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I received my prototype last week and couldn't be more excited, it works! Got it done by a welder at a metal shop for only $50 bucks. I'm now working on a sales sheet, and getting my PP filed. But I'm having second thoughts about my market research...How much is enough?
For example: Do I need to know manufacturers cost before I call?
I want to avoid the cost of a CAD design if I can. But if this is a question that some of you guys hear a lot, and is a deal breaker, then it may be worth it.

Thanks

Re: Is knowing manufacturers cost important if licensing?

Postby JoeWaisman » Tue Aug 03, 2010 7:32 pm

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Short answer: Yes it's important. How important? I haven't been through that process yet, but if I were in the managers chair watching a new idea presentation I would want to know the market analysis and manufacturing cost numbers first. Having some of that done might encourage me to risk my own $$ for a market analysis.

Extra Stuff:
Your product is not a Salvador Dali panting. It likely has no intrinsic value beyond the ability to add net revenue for the company.

Let's assume a hypothetical situation where you have a product that much of the population would pay $50 for, and it costs $20 to manufacture. Let's also say I have a product that does the same thing, but costs $40 to manufacture. Yours might be dropped because it's too costly...mine definitely would be.
___________________________________________
"The horse is here to stay but the automobile is only a novelty, a fad."
Fun links:
*http://www.scribd.com/doc/441708/Bad-Predictions-About-Great-Inventions

Re: Is knowing manufacturers cost important if licensing?

Postby Roger Brown » Wed Aug 04, 2010 6:02 am

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Your question really depends on who you are approaching. If you are approaching a small company that hasn't done a lot of overseas products your information would be valueable in making a decision.
But, if you are approaching lets say Mattel with a toy product your information is basically useless to them. Because of the massive amount of products they have made overseas you would be hard pressed to get any quotes as low as they could due to the volume they produce. They have their own factories making the products at a fraction of what you could negotiate with a manufacturuer overseas.
Come visit my sites at http://www.RogerBrown.net
or http://www.looking2license.com
I have gotten 9 products licensed spending less than $100 on each, you can too.

Re: Is knowing manufacturers cost important if licensing?

Postby AmrTen » Wed Aug 04, 2010 6:39 am

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Roger Brown wrote:Your question really depends on who you are approaching. If you are approaching a small company that hasn't done a lot of overseas products your information would be valueable in making a decision.
But, if you are approaching lets say Mattel with a toy product your information is basically useless to them. Because of the massive amount of products they have made overseas you would be hard pressed to get any quotes as low as they could due to the volume they produce. They have their own factories making the products at a fraction of what you could negotiate with a manufacturuer overseas.


I'm planning on calling the bigger multinational corporations first, but with both small and large companies it just seems discovering manufacturers cost would be something they want to find out themselves, since it certainly seems that it could lead to being a deal maker or breaker.

Kind of along the same lines:
Do you know what materials your proposed product will be made out of before calling? Do they ask this?

Thanks!