Manufacturing Your Inventions!

   

The manufacturing process has many steps and can take over a year to bring a product to market. The steps in manufacturing an injection molded part are Engineering, Prototyping, Testing, Design Modification, Material selection, Mold Making, Test Production, Modifications to Mold, Packaging Design, Production, Packaging, and Shipping. Each of these steps can take weeks to months to complete. InventionMakers provides all the leg work and engineering and technical work on this phase. Your investment is only for third party company costs for: Prototypes, Molds, Package design, and initial production direct costs (usually $5,000 to $10,000 per part, but can vary depending on the size and complexity of the product). This can easily be the most expensive part of making a profitable invention. Often however, it may be possible to skip this manufacturing step if the patent can be licensed. The chances for success are less but so are the costs. Thus, many inventors choose to try and license their patent instead of manufacturing.

If you choose to take the manufacturing route, all your costs will be repaid first when profits begin coming in. Costs are figured as the sum of direct manufacturing costs, packaging, shipping, handling, and advertising from third party companies. All internal costs such as wages for the primary Engineer and office expense(figured at a flat $250/mo.) are not repaid until after you are paid back. Thus, you get the profits off the top, which reduces your risk. Thus, after your development costs have been paid back, including cost of the patent, our costs will be reimbursed and would include engineering costs and the flat rate office costs. Once these costs are paid, all profits will be divided according to a royalty scale agreed upon by both InventionMakers and you the inventor before manufacturing begins.  If a third party manufactures the invention, royalties will be divided according to the percentage of patent ownership. This means more royalties for you, and less creative costing for us. You the inventor can also decide to manufacture the invention yourself or through another party if you choose, but you must negotiate how royalty payments will be made to InventionMakers for our patent ownership percentage just like we do with you. These manufacturing agreements will be negotiated between the parties involved when it becomes an necessary.

Below is a summery of duties and responsibilities between inventor and InventionMakers during the manufacturing phase(Note - InventionMakers only manufactures invention which they have patent ownership, and may charge extra for manufacturing a product if their ownership is below 50%):

Manufacturing Responsibilities of Inventor

Manufacturing Responsibilities of InventionMakers
  • Third party costs for Prototype construction.
  • Third party costs for production molds and other production equipment.
  • Third party costs for package design
  • Third party costs for initial test run and production run. (Initial production volume negotiable)
  • Engineering design and CAD drawings
  • Material selection
  • Prototype design and modifications
  • Prototype testing and modifications
  • Organize mold design and manufactures to produce the invention
  • InventionMakers internal costs
  • Marketing and Advertising costs



Below is the payment priority schedule for the gross receipts on product sales.

  1. Production, Assembly, Packaging, Shipping and Handling costs after initial production.
  2. Repayment of Prototype, Production Molds and other Production Equipment, Package design, and Initial Production costs incurred by the inventor.
  3. Repay to InventionMakers for direct manufacturing costs associated with production ramp-up(if any).
  4. Repayment of Office costs at $250 per month.
  5. Engineering, Patenting, and manufacturing costs associated with Primary Engineer's hourly wage (presently $85 per hour) A maximum limit to the hours worked is set before work begins to protect you from runaway work. This maximum will very depending on the project, but in general will be around 375 hours.
  6. Payment of profit royalties to inventor in accordance with mutually agreed upon contract.

This priority schedule places continued production of products and shipping and handling costs as priority, since without products no one can make money. As production ramps up, much of the profits will be funneled into making a larger inventory. Because manufacturing can have an 8 to 12 week lag between making an order and taking delivery of the parts. This lag means inventory must be stocked to stay in business. As sales go up the amount of inventory also must increase. If sales increase very rapidly InventionMakers will need to provide extra money to produce parts.

Once increasing sales levels-off there will be profits. These profits are first used to refund you, the inventor, for your investment. After you have received a complete refund, InventionMakers will take profits to repay money used to increase production rates. These costs will be limited to third party production costs. After production costs have been paid, then InventionMakers will be paid for office and primary engineer costs.

After these costs have been repaid, all profits will be divided between the inventor and InventionMakers in accordance with the royalty scale agreed upon by both parties before manufacturing begins.  If a third party manufactures the invention, royalties will be divided according to the percentage of patent (or patent pending) ownership.   Profits will be determined as gross receipts minus costs as defined above.

  CLICK HERE to continue