Chapter 2: Assessing Your Idea
IDC Inventors Guide / Chapter 2: Assessing Your Idea
This is the starting point for any new invention and in many cases also the end. Not all inventions have the potential to be commercially successful and there are numerous reasons why people decide not to pursue the idea. This is the stage where you find out if your product has already been thought of, whether the product is viable in a market and also if there is a market big enough that may need your product.
There are a few questions you have to ask yourself:
Has your invention already been thought of?
Frequently inventors have ideas that already exist, either as products or as patents in which case it is unlikely to be worth pursuing. In many cases a similar but not identical product or patent will exist, in which case you need to be sure your idea offers a big advantage. Thoroughly searching the internet and patent databases (see details later) is time well spent.
Who would use your product?
Is your product aimed at consumers or businesses? Is the market the whole population; is it national, gender specific or aimed at a specific demographic? It is useful to imagine a typical or range of typical uses. If you have close, trustworthy friends and family who fit this profile you can get their opinion but beware influencing their reaction. You need to be sure they aren’t just saying they like it because they don’t want to disappoint you.
What are the reasons people will buy your product?
What problems does it solve that aren’t solved by existing products or what advantages does it give? People have managed without the product until now, so why should they suddenly need or want it?
What is the potential size of the market?
This can be difficult to estimate but data does exist for sales volumes of most consumer product categories be it soft drinks, electrical appliances, furniture or medical devices. If such data is not available you may need to make an initial estimate from other sources, for example if you are designing a new baby toy you might use census data on the number of babies born each year to estimate how many such products are bought. When estimating the potential sales volumes be conservative - few new products will gain a market share of more than 5% unless they are truly revolutionary.
Can you protect your idea?
This is important as without any competitor company can copy your idea and use their market position and financial muscle to squeeze you out. The next section covers how to do this with patents and design registration.
What are the risks and difficulties you will face?
Developing, launching and profiting from your invention will be a long and complex process and problems can occur at any stage. Things to think about include; can you get the funding to develop it? Does the product require new technology to be developed? If so could there be problems or delays? Can you make the product for the target cost? Can you find distributors? Will consumers like it? Will retailers stock it? How will it be marketed?
What will the development and set up cost be?
There are many stages to developing a new product as explained in the Developing your idea section. The amount of work involved can vary dramatically from product to product. As well as the design and engineering costs other costs will include, prototypes, production moulds and set up costs, approvals and testing, initial production, shipping and storage. For a simple product these will be a few tens of thousands of pounds. For a complex product such as a medical device these can run into hundreds of thousands and even millions of pounds.
What is the target product cost and profit margin?
What will each product cost to make and what price can it be sold for? Most products are distributed through a supply chain with manufacturers, brand owners and retailers all handling the product. Understanding the pricing and margin each party needs to make is key to success. Many retailers will look to buy at half the consumer price or sometimes less. If you can’t offer them the profit level they need at the retail price they think will sell then they won’t stock the product. Do your research on the sector and retailers relevant to your product. What is the price of products of a similar size, type and complexity? Contact factories and retail buyers for initial price estimates.
What is the potential return on investment?
With information on the possible size of the market and profit margin you can make a very rough estimate of how much money the invention could make. Is it enough to pay back the development, set up, patent, distribution, administration, marketing and other costs? How long will the investment take to pay back? What is the best case and worst case? Does that make a good investment for you or an outside investor?
Finding the answers to these questions make take a bit of searching but will tell you whether the invention is worth pursuing. This process should be thorough but should not involve spending a lot of money. It may seem like a lot of bother but many of the answers to these questions can form part of your business plan (see later).
It is important to be unbiased and dispassionate in this analysis &ndash it is easy to get so emotionally attached to your ideas that you ignore the problems and weaknesses of the invention. Remember most successful inventors have many ideas before they find the true winner. Deciding not to pursue an idea, which doesn’t add up, is a positive result &ndash it is better to save your money and energy for the great idea still to come.
It is easy to get so emotionally attached to your ideas that you ignore the problems and weaknesses of the invention