Bringing Your Bag to Market
By Karen E. Klein
Q: My partner and I have patented and trademarked a bag and are beginning to search for a manufacturer. We are also looking into selling the idea outright. Where can we begin? ---- B.R., Eatontown, N.J.
Q: My partner and I have patented and trademarked a bag and are beginning to search for a manufacturer. We are also looking into selling the idea outright. Where can we begin?
---- B.R., Eatontown, N.J.
A: Doing the work to protect your design idea is a great start. Now, potential suppliers and manufacturers will not have to be concerned about liability issues when you show them your bag, which means they will be more open to talk to you and evaluate the possibilities for your product. You should also have several mockups of the bag produced, so you can demonstrate how it will look and perform.
Experts say that selling a design or an idea outright is usually not feasible, and can be a very discouraging experience. Buyers and R&D experts at manufacturing and retail firms see so many unsolicited ideas that they are typically reluctant to consider them seriously, says Warren M. Haussler, president of Keck-Craig, a Pasadena (Calif.)-based product-design firm.
Large companies have extensive new-product development departments responsible for market research and technical design -- and since they spend money in-house, they aren't looking for outsiders to come up with new ideas for them. There are brokers who find buyers of intellectual properties (such as design patents, utility patents, and trademarks) in return for a percentage of the contingency sale, but some are scam artists. Beware brokers who solicit up-front fees.
Instead of trying to market your idea, experts recommend that you make up a limited quantity of the bags and begin distributing and selling them as widely as possible. This will allow you to test the market, find out what people are willing to pay, how popular and durable your bags are, and get word circulating about them. If you can demonstrate their popularity and persuade manufacturers and retailers that there is a real market for your product, you're much more likely to see some interest, Haussler says.
PIECE BY PIECE.
When it comes time to manufacture, start your search in North America, experts say. Although manufacturing can be outsourced worldwide, dealing with foreign manufacturers initially will complicate your search unnecessarily. Almost all U.S. and Canadian manufacturers and fabricators are listed by product or service in the Thomas Register of American Manufacturers. You can find the annual hard-copy edition at most public libraries, or access it free online (www.thomasregister.com).
You should break the manufacturing down into pieces (fabric, sewing, labels, artwork, design, handle, packaging, etc.) and make some estimates based on the cost of raw materials and labor. Try to get some firm numbers on what an initial production run will cost you. You may find a manufacturer who will handle all the production, or you may discover that it will be cheaper to use several different firms to complete different steps in the process.
Each commercial industry segment has its own trade magazines and trade shows. The trade journals, most of which publish annual buyers' guides, and the trade shows, with their exhibitor directories, should all offer great leads for you. If you have designed a plastic or paper shopping bag, research the packaging and converting industries for contacts, trade journals, and industry exhibitions. Screen many potential manufacturers, then ask for price quotes from three or four of the most promising.
Robert D. Reid, a new-product consultant based in Los Angeles, says it will help you to write up specifics about the manufacture of your product. "Expect quotes to [include] non-recurring expenses (NRE) for tooling, set-up, etc., plus a per-piece price, based upon your annual unit volume," Reid says. "First-article inspection will be gauged against your written specification."
If you can afford professional insight and guidance -- especially if you are a first-time entrepreneur or new to this industry -- you might hire a new-product consultant to help you judge the commercial viability of your design, source materials, line up a manufacturer, and market the product. Such consultants typically charge an hourly rate and should give you an estimate for their services, including a plan that specifies what they will help you achieve.
Another option is to grant a license to an established company that wants to use your patent. You can approach known players in your market directly, or use a broker to find and negotiate with potential licensees. Seek appropriate legal advice when structuring licensing agreements, Reid says, particularly regarding performance quotas that an exclusive licensee ought to meet.
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