Do you want to know how much your patent is worth today?
Patent Value Calculator. Lean Prototyping Method
Calculate the value of a patent according to: Lean Prototyping
According to the information you have provided, and without it representing a commitment for Let’s Prototype, the results of your calculation are:
The approximate value of your patent: $
For estimating the valuation of your patent, we have used our own method based on the weighting of variables established by investors and regular patent buyers in different industries.
Once the 10 variables of the Lean Prototyping patent valuation method have been defined, private investors have determined discount rates based on the perceived risk according to the current state of the product (technology) and the business.
Do you want to know how we calculate the value of a patent?
These are the variables and arguments that quantitatively influence the value of a patent:
Type of patent or protection method used: The chosen protection method plays a major role in determining the value of a patent. The different types of patents show significant variations in protection periods, the possibility of internationalizing protection, as well as in the importance of the elements claimed as innovative.
Country of origin of the patent: The value of a patent is largely influenced by the potential of the market where the exclusive rights are reserved. The legal security of the environment, the ease of access to financing, and the dynamics and size of the market are key aspects in the process of valuing a patent.
State of development or maturity in the patent registration cycle: The state of development or maturity in the patent acquisition cycle impacts two key elements: first, whether the patent or protection method has already been approved by the official patent office corresponding to the country of origin, and second, it has a major impact if the chosen type of patent requires a substantive examination by the officials evaluating the patent’s approval.
Remaining protection time at the moment the patent valuation is established: In the weighting of variables, this refers to the remaining validity period of the patent. For a patent buyer, it is essential to know the actual time available to commercially exploit the invention exclusively.
Strategy and real possibilities for internationalizing the patent: The value of a patent is closely related to its ability to generate economic resources for its owners. Likewise, the revenue projections from the exploitation of a patent depend largely on the number of potential customers; undoubtedly, the market size and the ability to internationalize are key in this regard.
Technological validation of the patent: Surprisingly, there are many patents, utility models, and even industrial designs that are not viable in practice. Poor decisions by many inventors lead them to patent before validating the technical feasibility of an invention. This “technical feasibility” component significantly increases the perceived risk for investors and patent buyers.
Strategy and Business Model: Most inventors downplay the need to have a strategy and model to monetize the patent. They are usually creative profiles with high potential to conceive the invention and bring the idea to life; however, they lack the experience to design a business model that is optimal for turning the idea into an active source of revenue. Investors and patent buyers consider this a weakness in most inventors, thus associating part of the risk of a patent with the existence—or lack—of a sufficiently clear and robust business strategy.
Inventor’s experience: In relation to the previous variable, the experience of the inventor or the presence of a team that demonstrates the ability to carry out the development of the product or the business is essential to reduce the perceived risk for investors or patent buyers.
Market positioning opportunity for the patented invention: This refers to the pricing and market positioning strategy. Private investors and patent buyers value positively the experience in sales channels that allow assessing its status at the business level.
Patent sector or industry: Private investors and patent buyers research the behavior of patent purchase and sale transactions in each of the industries where they invest. In this way, they maintain control over margins and acceptable risks according to the industry.
Do you want us to carry out a more robust valuation of your patent?
You can speak with one of our experts to get ideas that will surely help you design a strategy that translates into an increase in the value of your patent. Request an Appointment: https://calendly.com/erick-remedios-letsprototype/llamada-inicial?month=2024-07" target=
Unfortunately, we have not been able to calculate an estimated value for your patent. The simple fact that the patent, or another chosen protection method, has NOT been granted by the Patent Office of your country of origin prevents us from completing the valuation calculations according to our proprietary patent valuation method.
Even so, we propose:
You can complete other calculations by simulating that you have already obtained the approval of your patent to find out the estimated values at the time of its approval, as well as details on how the value of your patent has been calculated.
You can meet with an expert to design a strategy to increase the value of your patents. Request an Appointment
If you are still in the preparation process and have not applied for a patent, you can use the online patent price calculator that we have also prepared for you. Calculate patent prices
El valor de tu patente es negativo o demasiado bajo.
Los inversores consideran que las patentes u otros métodos de protección de la propiedad intelectual, que no tengan validación técnica, tiene un nivel de riesgo demasiado elevado, lo que afecta de forma directa el valor de la patente.
Partiendo de esta base, los compradores de patentes no confían en inventores que han procedido a patentar sus ideas sin antes definir la viabilidad técnica de las mismas. Los compradores de patentes experimentados, consideran que una patente cuyo prototipo no ha sido fabricado, representa un riesgo muy elevado, ya que otros inventores y equipos especializados, pueden inspirarse en la idea y materializarla con cambios y mejoras sustanciales, suficientes para elaborar otras patentes.
Do you want to know how we calculate the value of a patent?
These are the variables and arguments that quantitatively influence the value of a patent:
Type of patent or protection method used: The chosen protection method plays a major role in determining the value of a patent. The different types of patents show significant variations in protection periods, the possibility of internationalizing protection, as well as in the importance of the elements claimed as innovative.
Country of origin of the patent: The value of a patent is largely influenced by the potential of the market where the exclusive rights are reserved. The legal security of the environment, the ease of access to financing, and the dynamics and size of the market are key aspects in the process of valuing a patent.
Estado de evolución o madurez en el ciclo de registro de la patente: El estado de evolución o madurez en el ciclo de obtención de una patente, impactan dos elementos clave: el primero, si la patente o método de protección, ya ha sido aprobado o no por la oficina de patentes oficial que corresponda según el país de origen, en segundo lugar, tiene un gran impacto si el tipo de Patente elegido requiere un examen sustantivo por parte de los funcionarios que evalúan la aprobación de la patente.
Technological validation of the patent: Surprisingly, there are many patents, utility models, and even industrial designs that are not viable in practice. Poor decisions by many inventors lead them to patent before validating the technical feasibility of an invention. This “technical feasibility” component significantly increases the perceived risk for investors and patent buyers.
Strategy and Business Model: Most inventors downplay the need to have a strategy and model to monetize the patent. They are usually creative profiles with high potential to conceive the invention and bring the idea to life; however, they lack the experience to design a business model that is optimal for turning the idea into an active source of revenue. Investors and patent buyers consider this a weakness in most inventors, thus associating part of the risk of a patent with the existence—or lack—of a sufficiently clear and robust business strategy.
Inventor’s experience: In relation to the previous variable, the experience of the inventor or the presence of a team that demonstrates the ability to carry out the development of the product or the business is essential to reduce the perceived risk for investors or patent buyers.
Market positioning opportunity for the patented invention: This refers to the pricing and market positioning strategy. Private investors and patent buyers value positively the experience in sales channels that allow assessing its status at the business level.
Market positioning opportunity for the patented invention: This refers to the pricing and market positioning strategy. Private investors and patent buyers value positively the experience in sales channels that allow assessing its status at the business level.
Do you want us to carry out a more robust valuation of your patent?
You can speak with one of our experts to get ideas that will surely help you design a strategy that translates into an increase in the value of your patent. Request an Appointment: https://calendly.com/erick-remedios-letsprototype/llamada-inicial?month=2024-07" target=
Patent Valuation | Online Calculator
There is no exact method for valuing patents and other assets. The value of a patent is the economic figure that must balance between the risk perception of buyers and the opportunity perception held by inventors.
Regardless of the method chosen to value a patent, it is true that no one can assert the relationship and consistency between the value of a patent and the sale price of a patent.
Difference Between Patent Value and Patent Price
Patent Value: The valuation of patents defines the amount set by the patent owner, marking the starting point for negotiations in patent purchase and sale of the patent of an invention. The valuation of a patent, regardless of the method used, is an aspirational monetary figure.
Patent Price: The price of a patent is the figure at which an economic transaction for the sale of a patent or patent licensing is closed. The main difference between the value and the price of a patent is that the price is the amount that investors or patent buyers are willing to pay for acquiring the rights granted by the patent.
Value Patents Calculator - Method Let´s Prototype
Companies can be valued based on their ability to generate future profits, according to an expectation, as we have seen in the case of the discounted cash flow valuation method, or they can be valued by their book value in a specific situation. This type of valuation is less favorable for business owners, as the value of all their efforts is summarized in the company's current economic situation.
Similarly, in the case of intellectual property-based assets, some experts consider the book value method for valuation. In this case, a valuation is made that exclusively considers the costs associated with the inventor's patent portfolio. The costs borne by the inventor are evaluated, as well as the costs of maintaining the portfolio throughout its protection period. Taking these costs into account, an exit value for the inventor is established, which will overvalue patents that the inventor knows are already obsolete and lacking market opportunity, but will undervalue patents in their portfolio that have a clear prospect of success.
The method of patent valuation based on accounting or cost structures is used, especially in the case of companies or inventors in a critical economic situation. It is very common for serial inventors, with a large patent portfolio, not to dedicate the necessary resources to demonstrating the technical and economic viability of a patent. Instead, they invest large amounts in protecting inventions, but very little or nothing in their development. This type of strategy or behavior, often seen among inventors, results, at best, in exits through the book value of patents.
From Let´s Prototype, we consider that applying the accounting value method for patent valuation is an undesirable situation for the inventor. It is often the result of a series of poor decisions, where the inventor's love for the invention and t
Valuation of patents based on future cash flows:
Patent valuation based on future cash flows is a logic that relies on analyzing future financial projections. Patents, like any other asset, have value based on their ability to generate income and benefits for the company or inventor.
To determine how much a patent is worth based on cash flows, it is essential to establish a realistic financial projection. The term “realistic” is conditioned by the patent's historical exploitation.
Some experts advocate for valuing patents based on future cash flows, even in cases where patents have not yet generated income. These intellectual property advisors, patent experts, support their theory through the recovery of general market data and specific data from the same industry.
From Let´s Prototype, we believe that applying the patent valuation method based on future cash flows is inadequate for cases where patented products are not on the market generating benefits. Similarly, the 82 investors who have participated in the creation of our own patent valuation method agree with this statement.
The cash flow valuation method is well-known in the business valuation process. In this area, there is already a consensus among professional investors that applying this method to companies with no market history makes no sense. Indeed, the lack of history is the reason we discard this method for valuing patents that are not active in the market.
The analysis of cash flows for valuing patents makes a lot of sense when there is a future projection supported by the patent's exploitation history. In these cases, investors or patent buyers will negotiate with the inventor a discount rate to calculate the patent's value. This discount rate will represent the perceived risk by the investor and the inventor's expectation outlook.
We will have a good valuation when the proximity between the patent value determined and the patent sale price can be demonstrated.
Calculate Patent Value:
Patent Valuation Based on Book Value
Companies can be valued based on their ability to generate future profits, according to an expectation, as we have seen in the case of the discounted cash flow valuation method, or they can be valued by their book value in a specific situation. This type of valuation is less favorable for business owners, as the value of all their efforts is summarized in the company's current economic situation.
Similarly, in the case of intellectual property assets, some experts consider the book value method for patent valuation. In this case, the valuation takes into account exclusively the costs associated with the inventor's patent portfolio. It values the costs borne by the inventor as well as the costs of maintaining the portfolio throughout its protection period. Considering these costs, a liquidation value for the inventor is established, which will overvalue patents that the inventor knows are already obsolete and have no market opportunity, but will also undervalue patents that are part of their portfolio and have a clear prospect of success.
The method of patent valuation based on accounting principles or cost structures is primarily used in cases of companies or inventors in a critical economic situation. It is very common for “serial inventors” with a large patent portfolio not to allocate the necessary resources to demonstrate the technical and economic viability of a patent. Instead, they invest large amounts in protecting inventions but very little or nothing in their development. Such strategies or actions, which are common among inventors, result, at best, in exits through the book value of patents.
From Let´s Prototype, we consider that applying the accounting value method for patent valuation is an undesirable situation for the inventor. It is often the result of a series of poor decisions, where the inventor's love for the invention and t
How much is a patent worth according to professional investors' principles?
One of the methods for calculating how much patents are worth, more democratized in the market, is based on the valuation systems used by professional investors. Professional investors value a company, a patent, or a business opportunity based on its ability to generate an economic return, considering: the time to return, the risk, and the current situation.
For professional investors, investment in patents is not very attractive. Primarily because the economic validation and technical validation of an invention is very time and resource-intensive. While it is true that there are investment funds specialized in patents and hardware product development, it is also true that they are less common than investment vehicles in startups.
Another significant factor in professional investors' valuation methods is the evaluation of the team. Patent-owning inventors often tend to be more solitary and distant from business management, which tends to detract from the valuation of a patent from the perspective of professional investors.
Industry experience and details about similar operations are usually a fundamental guide for establishing valuations, from the perspective of professional investors. In this regard, the mere fact that they are patents, usually unique products, makes industry references distant and unreliable according to their view.
The investors or patent buyers are usually industrial companies, leaders, or those interested in entering new verticals, or micro-investors through crowdfunding platforms. Of course, these platforms are useful for raising funds for the development of an invention, but not for selling the patent.
Patents Value with Lean Prototyping Method
Lean Prototyping is a proprietary method developed by the founders of Let´s Prototype, former executives of crowdfunding platforms and private investor networks.
The Lean Prototyping method is not just a patent valuation method, but a management system designed to help inventors define strategies that enable them to turn ideas into products with high market success potential, while also maximizing the value of patents.
The patent valuation calculation system integrated into Lean Prototyping has been created with over a decade of experience managing investment rounds with private investors and family offices in innovative projects. To conceive the patent valuation system, the risk perception of investors, industrial partners, and patent buyers from Europe and the United States has been analyzed.
The patent valuation system includes a weighting of variables distributed across 10 modules:
- Type of patent or protection method employed.
- Country of origin or origin of the patent.
- State of evolution or maturity in the patent registration cycle.
- Remaining protection time, at the moment the value of the patent is determined.
- Strategy and real possibilities of internationalization of the patent.
- Technological validation of the patent.
- Definition of business models and development strategy around the patent.
- Inventor's experience in similar processes.
- Opportunity for market positioning of the patented invention.
- Patent sector or industry. Dynamics of patent acquisition in the vertical and acceptance of innovation in it.
How much is a patent worth? Lean Prototyping assessment method
If you want to know the approximate value of a patent, you can use our calculator to value online patents. You will immediately get a result online. This result is completely estimated and does not refer to any type of connection or responsibility.
If you are interested in valuing your patent in greater depth or need help increasing the value of a patent, we encourage you to speak with one of our experts.
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