How to Evaluate the Retail Opportunity of a Product

What Inventors Need to Know…

Most independent inventors want to license their invention to a retailer. Usually an inventor does not have the experience nor the money to market, manufacture and distribute a product on their own.

So when I ask an inventor if I had a magic wand and instantly gave you a patent, what would you do with it? I get an answer like “I would take it to a large retail chain and work out an exclusive licensing agreement.

Whether they could even get their foot in the door is a long shot in itself, but let’s just say an inventor has a buyer’s ear or is working with a product developer. No matter how good the product is, it will not sell itself.

Are you looking to make a deal? What bargaining power do you have if all you have is the idea? What else can you bring to the table? The more information you have, the better negotiating leverage you have when bartering the licensing royalty rate.

In order for a product developer to properly analyze and evaluate the retail opportunity of a product the following critical points need to be addressed (not listed in any particular order as to importance):

1.  Wholesale price range
2.  Suggested retail pricing
3.  Unit Cost
4.  Current inventory (number of units on quantity)
5.  Sales presentation material
6.  A  good presentation of all of the products benefits and features
7.  Target market
8.  Estimate of market size
9.  Close up image or text version of packaging
10.  Bar code
11.  How many fit in store case pack
12.  Overall product dimensions
13.  Product weight (single item)
14.  Intellectual property protection: trademark (brand name) and patent protection
15.  Current retail stores or on-line retailers carrying product
16.  Do you have current manufacturing? domestic or international
17.  Current competing products in the market: sizes and pricing
18.  Estimated production time for new inventory
19.  Are there any other variations or a contemplated next generation of the product?

Each side in the negotiation brings certain elements to the table. Every element you can add raises the odds that an agreement will be made. And each element raises the bargaining power to negotiate and profit from any deal.