Possible Business Models for Inventors.

The business models for inventors are tools that define how inventors extract value and information from the outside, transform it into inventions or innovative products, and ensure that these products or inventions can be monetized.

Monetizing an invention is the great challenge often overlooked by novice inventors. Only a small minority include the design of a business model in their list of priorities and basic needs when starting the project.

Most inventors spend dozens of hours defining how the invention works, its technical features, possible materials, and other product-related details.

Let's be honest: How much time have you spent on the design of a business model that will allow your invention to succeed in the market?

Types of business models for inventors.

There are 3 types of business models or business model categories that are commonly used by inventors. The common goal of these business models is to monetize the idea.

Business Model 1: Full sale of the patent.

Selling a patent is a business model through which the inventor gives up their industrial property and relinquishes all economic and political rights over their invention.

Selling a patent is the shared dream of creatives, inventors, and startups.

Monetizing an invention by selling a patent is a possible but very unlikely option. Although this statement contradicts most so-called patent experts, the truth is that selling a patent is an unlikely scenario, and reaching this point will still require a significant investment on your part.

Business Model 2: Earning royalties from a patent.

The royalty-based patent business model consists of receiving payments, as agreed, for the exploitation rights of the invention.

In the case of the royalty model for inventors, there is no total loss of control over the patent. There are royalty agreements for a defined period, and the amounts and payment terms are established. Once the conditions for granting the exploitation rights of the invention have been met, the inventor can explore new business models.

There is also the extended-term royalty payment model. In this case, unless a breach occurs that leads to the termination of the royalty contract, it is practically as if the patent had been sold. While the political rights of the patent remain valid and in the hands of the inventor, there will be no other opportunities to monetize the invention.

Business Model 3: Commercialization of inventions.

The commercialization of inventions is probably the business model least desired by creatives. However, the vast majority end up having to follow this path. The commercialization of an invention in the market is not a poor business model—quite the opposite. Launching a novel product to the market can be the business model option that turns out to be the most profitable for inventors.

Best methods to monetize an invention

Criteria Sell the patent Earning royalties Sale of the invention
Clients
Large product distribution brands
Large product distribution brands
End users or companies that need the product.
Bargaining power
Low
Low
Middle
Estimated probability of success
2%
15%
50%
Profitability
Middle
Middle
High
Effort
High
High
High

From this comparative summary of business models for inventors, there are some conclusions that can be useful for designing your strategy or plan to monetize an invention:

5 Useful tips on business models for inventors.

  1. The Utility Model is not a method compatible with business models that involve making money by transferring the rights of a patent.
  2. If you want to sell a patent or earn royalties, the key indicator of your business is the “Patent Value”.
  3. Except for notable exceptions, the bargaining power with well-established brands in the market is very low or nonexistent. 
  4. Registering a patent is easy. What is truly difficult is monetizing the patent. This depends on the quality and usefulness of the invention, but it will also depend on the protection strategy.
  5. The business design for inventors must grow in parallel with the product and is no less important than the technological research.
modelos de negocios para inventores

At Let’s Prototype, we specialize in designing and developing innovative products. Not by chance, our team comes from leading a consulting firm for startups and managing investment funds. Although we do not focus specifically on designing business models for inventors, we would be happy to share some ideas that will surely be useful in shaping a strategy.

Book a free appointment now with our business strategy team for inventors.

Do you want to turn your idea into a product?

The time to bring your ideas to life is now. We accompany you throughout the entire process: from idea to product.

 

 

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Erick Remedios Muiños
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