Drummer Talk

Drummer Talk 208 – So You Want to be an Inventor? (Part 2)

Troy wraps up our 2-part series on helping to get your drum invention to reality and we go over the 2014 Drummies! in the news.

News from the Pinboard

 

Topic – So you’re an inventor? (Part 2)

Marketing – Finding Demand – Making contact – Tools – Contracts

  • Creating Demand is Hard – Filling Demand is Easy- Beat Engineers Disease – Market validate before construction See how easy it is to validate your idea

  • Market Validate – finding demand Use these online tools that are cheap and free to see what Find What People Are Already Searching For

    • Google adwords & Keywords Planning Tool – See what keywords and phrases people are searching for on google.  This will give you an immediate market size and possible monthly customer base

    • Global Market Finder – Google’s international Adwords

    • See how many people are searching for your idea before you get off the ground

    • See if their is a large enough market to sell to or have someone else sell for you

  • Website Market Validation Tools – Split testing – Dry Testing –

    • Dry testing  Build a mockup of an app or product and see how many people like the idea  By using google adwords you can drive pre qualified traffic to your

      • Dry Testing the want for a product by offering it online but not having any product to ship. Ie 6-8 weeks to ship. This is legal as long as no credit card information is captured

      • Create Forms in Seconds for Testing Checkout with or Without Payment Wufoo – Wufoo does not offer a full-featured shopping cart, but it provides the cleanest, easiest-to-use forms on the web. Create a checkout page that connects to PayPal and you can (1) link to this checkout page from your website or elsewhere, or (2) drop the code into your own website and have it hosted there. Wufoo is appropriate for testing and selling products

      • Email Marketing Campaign Tools. E-mail Sign-up Tracking and Scheduled Autoresponders AWeber and MailChimp – Both of these programs can be used to embed e-mail address sign-up forms on your site.

    • CrazyEgg – CrazyEggs monthly service shows you exactly where people are clicking most and least on home pages and landing pages. It is particularly helpful for repositioning the most important links or buttons to help prompt visitors to take specific next actions.

Creating Demand is hard – Filling demand is easy

  • Driving Pre-Qualified traffic to your site

    • Using Google adwords – you can see what people are searching for IE. ways to clean a cymbal, or ludwig strainer, metronome ipad app etc. you can see how many people are searching for said solution to problem. this will let you know if you have a viable audience. Then you can use google adwords to bring that audience to you website for little money by bidding on Low competition/High traffic Niche keywords.

    • Create a Giveaway – product IE, video or Ebook in exchange for an email address ( The product can’t be crap or something you did 8 years ago

      • This will help you start a conversation with a new audience

    • Email Marketing Campaign Tools. E-mail Sign-up Tracking and Scheduled Autoresponders AWeber and MailChimp – Both of these programs can be used to embed e-mail address sign-up forms on your site.

 

  • Sell Sheets – The Fastest, cheapest way to shop an idea for licensing

  • cheap easy way to market your idea direct to potential buyers and future licensee

  • Craft a great benefits statement – Apple 1000 songs in your pocket

  • No prototype needed – You don’t need a prototype just a good picture or illustration of the product that can be created in photoshop, AI or other software

  • See Sample

 

Deal Making – There is no standard deal in any business. There are only common practices.

Check out this sample contract

  1. Everything is negotiable, be creative, and put things on the table that are not common.

  2. He Who Cares Less Wins

  • Negotiation of Terms, Exclusive Distribution or Manufacture, Territories, Contracts, Licensing Fees, Percentages – Audits Exclusivities -, Frontload Payouts, Minimum Licences

    • Terms – Henry Ford said, “You set the Price I will set the terms.”

    • Length – How long you will exclusively or temporarily Licence or Sell your product to said Party or free to sell to said territory :3-5 years is a general starting point with options for extensions or sales goals

    • Industry – Does your product fit into different industries? Can your product be sold in grocery stores, States, Retail Chains, Industry Like Big box music stores, pharmacies, internet sales, and Amazon?

    • Territories – Distribution & Licensing in different countries, States/Provinces Distribution access for tiered products (Chinese made drums and American made drums) Retail chains, types of retail  IE GC and Sam Ash vs. Best Buy or online sales

      • The party wanting to purchase your product may have strong sales in the USA & Canada but are weak in Mexico – you can negotiate a slightly lower rate in exchange to be free to licence in Mexico – Reversely if they want to use your product as a hot item to gain market share in Mexico you can negotiate a higher rate

    • How much can I expect? Most licensing deals Royalty Rates are 1-10%(of wholesale) but Vary with cost of product and frequency of sale Ie High frequency small percentage IE food and beverage, Low volume high profit IE gym machine higher percentage

    • Minimum Guarantees – you can negotiate a minimum sales figure in dollars or units per quarter or year (most do yearly as Christmas season creates high fluctuations this helps incentivize to make sales as well as guarantee you a certain amount). These can be structured per year with penalties as still as loss of product licence or distribution

    • Inside / Outside deals – Rarely done or never put it on the table: A distributor pays a start up fee and only pays when manufactured or purchased but requires exclusivity

    • Pay For Patents – If your idea is being licensed you can request for the manufacturer to pay for the cost of patenting your idea as part of the contract (this is very common). Add it in as last negotiating points and not the first.

    • Improvements Clauses – Make sure you write in that you own all improvements made to your product if you’re a licensor and improvements are requested to your manufactured product.

    • Audits – This is common line item in contracts but rarely invoked

      • If you feel you’re not being paid for a licensed product and can be

      • Audits can take years and the cost of the CPA is the auditor’s responsibility if the result is 6% or less courts will generally not award to the plaintiff.  It’s usually 10% or more then all CPA fees are the responsibility of the ”audited.”

      • Lawsuits can take years, costing 1.5 million and many legal firms will not take a case unless at least 20 million in sales are on the table.

    • Defamation Clauses : Tiger woods scandal or Gilbert Godfried with Aflack. This can get tricky but it can be very important if your product is a high use like razor blades, or food products.

 

Follow up reading

 

Music from this week’s Show:

 

In closing…

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