Monday, October 20

What's your Value Index?

We talked in previous posts about how the "Use Cycle" and the "Value Cycle", along with the intrinsic qualities of the product, represent the consumer's "Value Proposition" 
To recap, the Use Cycle of a product is the period of time from when the product starts use by the consumer, to when it ends use. While the Value Cycle looks at use in terms of frequency, factoring in cost to create what is known as a value index.
Two well know statements -Everything costs money &Nothing lasts forever – provide us the basis for the value cycle. It is in fact, the relationship between time and money in a consumer's mind as it relates to the value of a retail product. In simple terms, the longer the products serves its consumer and the less the consumer paid for it, the higher the value index of that product.

To explore this concept let’s return to our friend the Chip Clip. At .99 cents the clip has a relatively low value expectation to the consumer. The consumer expects it to work, but only a limited number of times before the parts fail and it no longer keeps those potato chips fresh.  That expectation would obviously change if the consumer were paying $4.99 for the clip. In fact, the promise you are making as the manufacturer would be that much greater and the quality would be expected to follow.

The math is pretty simple: The cost of the item (divided by) The average number of uses (equals) The Value Index.

"Value Index" is just a way of describing the mathematical result of the equation - but whatever you do, don't ignore it. The Value Index is a score of sorts, a grade if you will that ultimately determines how well you did your job.
If the cost is high, the average number of uses low, the value index will be very poor and people may buy your product once (remember first sale) but never a second time. 
In the inverse, if the cost is low and the average number of uses is high, your value index will be through the roof and people will not only buy you product twice, they will talk about it to others and encourage them to purchase as well.
Say our Chip Clip was used 200 times before it failed. At .99 cents, the cost (99 cents) divided by the average number of uses (200) would give us a value index of about 1/2 of a penny per use - that's a good value index for a product like a chip clip in that price point. But, change the cost, or the number of uses, and things rapidly go up or down - and so does your chance for a sale.
At this point you're likely asking how some of these numbers can even be found by you, the inventor. The fact is, at the development level the numbers you are normally using to arrive at a value index are largely notional. You can of course test your product samples to find their failure point (something you should be doing anyway) and use that as your "average number of uses".  Audit the market (another thing you should be doing anyway) to find the average MSRP (Manufacturer Suggested Retail Price) to use as your "cost" value, and the rest is just math.
Keep in mind, the value index doesn't mean anything to anyone but you. It's a tool used to help you work the bugs out and increase the value proposition to the customer. It's not printed on the package, it's not on your sell sheet, it's your way of dialing in your product to make sure when it comes out on a store shelf people want to take it home.

We as consumers use our personal experiences and common sense to develop value expectations for everything that costs us money. When the value of that product exceeds our expectations we think we got a great deal. It's imperative that the value proposition of the product always exceed the value expectation of the consumer since that sets the tone for the product reputation - and that sports fans will always impact sales.

Learn to use tools like the Use Cycle and Value Cycle in the development of your products, don't be afraid of scoring your work with a value index. These things ultimately help make better products, and dramatically increase your chances of success.

Friday, October 17

Well that's Handy....

I have a name, you have a name – in fact most people I know have a name. Come to think of it, most things I know have a name. I guess it should be no surprise then that we come to identify things by those names – retail products are no different.

In looking at naming a product we start by asking the question - what are we trying to accomplish?
Are we looking for - fun, catchy, descriptive, short…all of these? Yes, all of those things rolled up into a nice easy to remember, simple to spell, won’t take up too much room on the label name.
We start by looking at the values of the product. Say we're developing a product for a disposable trash bag packed tightly in a small plastic case for your car or to carry in your purse.
We know the product's prime value is the containment of trash. However, it is also has additional values such as convenience, compactness, ease of use, disposability and so on. We have to communicate as many of those values as possible to the consumer - we do that through the name and the packaging.
In naming this particular product we almost have to use the word "bag" because looking at the tightly rolled product in the plastic case it’s not apparent to the consumer that it contains bags.
Once we have established in the consumers mind it is a bag. The consumer will make certain assumptions about the product based on what they know from previous experience. They know the function, they know that in that small case it's likely a small bag, they know it's probably a light duty bag since only a thin plastic could likely be compressed that way into a small case.
They already know how a bag works, so now we have to build on that by communicating to the consumer the priority of the remaining values.
Large volume
Small size

So how do we find a mate for the word  “Bag” in the name? We turn to the Thesaurus.
Let's take the value of “Convenient” as an example. Right off the bat the thesaurus spits out a good candidate in the word “Handy”.  Handy Bag
This may or may not be the name we want, but for the sake of this discussion you can see it compounds the know values the consumer has about the bag, and adds a value the consumer may not have thought about this particular bag.
Quick, Tough, Sturdy - Adjectives like these help paint a picture in the consumer's mind of value and the more the consumer feels value from the product, the more likely they are to purchase it.
Mark Reyland

Thursday, October 16

Novice Inventors Easy Prey for Scammers

 By  The Career Hot SeatFOXBusiness

Any conversation about American inventors typically congers images of the likes of Alexander Graham Bell, Thomas Edison, and Henry Ford. This country was founded on great inventors and our tradition for encouraging innovation still makes us great. However, the process is tough and the odds of getting an invention to market are slim.   

To learn more about the challenges modern inventors face I spoke with Akos Jankura, inventor, entrepreneur, and host of My Cool Inventions Radio. Jankura got his start as a chemist developing stain removers and laundry sheets. He eventually developed and patented his own specialized brand of laundry sheets that went on to sell millions. His passion for solving problems through invention led him to want to help other aspiring inventors. Jankura firmly believes “the best asset this country has is inventors.” However, the challenge these inventors and aspiring entrepreneurs face is a minefield of unregulated rip-off artists and scammers looking to take advantage of them. Jankura has seen far too many scammers prey on those budding inventors who have just given birth to their invention and are blinded by the prospect of getting their invention out into the world.

To help new inventors navigate the murky waters of bringing a new invention to market he launched My Cool Inventions Radio. The show is somewhat of a cross between Shark Tank and American Idol where inventors come on free of any charge and present their products to a national audience where listeners will vote on the viability of the product and provide real feedback to the inventor. When it comes to avoiding common pitfalls, Jankura advises new inventors to consider the following:

Stop and Learn: Just as in any business endeavor, you must educate yourself. “I wouldn’t tell someone to jump into a pool if they didn’t know how to swim,” says Jankura. The reality is lack of knowledge can put a new inventor at a tremendous disadvantage because it makes them vulnerable to scammers. Due diligence is important. Be sure to check out trade associations, industry publications, and online resources before making the plunge.      

According to Jankura organizations such as the Electronic Retailing Association, RESPONSE Expo, and USPTO seminars are great places to get information about the process of getting an invention to market.

Connect with the Right People: Jankura likens the inventing process to mountain climbing. “If you are going to climb Mount Everest you will need a guide” says Jankura. You will need an advisor with experience, someone who will help you avoid the traps of scammers. However, you must be deliberate in who you connect with. There are scammers out there who will claim they can get you access to key players or will claim their own affiliations and status will open doors. Jankura advises against paying for this type of access. Take your time and get to know the players before making any commitments.  

Don’t Pay to Play: The vast majority of inventions will never make it to market, yet every inventor wants to believe they will be the one to hit the jackpot. As a result, scamming aspiring inventors has become quite a business. Jankura encourages inventors to really focus on the true viability of their product before opening their wallets. It’s not always easy to take that hard look in the mirror, but you must. Be wary of those who are either too easily impressed or too eager to get you signed-up and going.     

Jankura notes there will eventually be costs associated with bringing an invention to market. You just have to be cognizant of who you are paying and why you are paying them. 

Wednesday, October 15

Just take a deep breath and relax…

 As you may expect, I hear a lot of complaints from inventors about someone stealing their ideas. But even I was taken aback by this one. This was sent to an invention submission company by way of their public forum. Although I doubt they actually stole anything, it does make you think about the strong emotions people have and how they express them.

You claim you don't steal people's ideas?  I did research my idea and it had NEVER been done before I submitted it to you lying thieves! No sooner did my idea stall in the selection process, than the FBI announces their new app for missing children.  THAT WAS MY IDEA!!! I submitted that.  It was almost word for word my idea, about amber alerts, and locating missing children, posting alerts on local computers, law enforcement notification, etc...almost WORD FOR WORD!!!

You stole my idea and you can deny it all you want.  I wouldn't have been so mad if it showed up a  few years later, or even a year later, but not even 3 months after I submitted it to you, all of the sudden, the FBI suddenly has a new app for missing children!!! Coincidence?  I don’t' think so! you stole my idea and  you sold it.

I hope you choke! You lying thieving good for nothing criminal! It will come back on you.  Mark my words, Karma is a bitch and she takes prisoners.  I hope you get what you have coming to you, because you are nothing but a liar.  I want my money back that I PAID you to steal my idea!  Give me back that $25!  That's the least you can do, you sniveling thief!!

So next time you see an inventor react like this, think for a moment about all the people who read it and how they use it as the paint to create a picture of you and I as inventors.

Tuesday, October 14

Quality, Convenience & Cost = What?

From the time we’re young children we’re taught about math. We see math in almost everything we do - often using it to explain the unexplainable and form that ever important baseline of logic we as humans always migrate towards. 

So it should be no surprise that inventors may from time to time use math to express elusive concepts such as customer value.

At its core, inventing is simply problem-solving. We as inventors survey the landscape of society looking for the problems that plague our fellow man - and we solve them.

But does all that hard work actually have value? Maybe, but unless we find a way to express value as a result we will never be able to understand how to achieve it as a result.

How? We turn to our trusted friend of omnipresent explanation - the math problem.

Let's say for example the amount of "help" your invention provides is expressed as “consumer value”. That is, the overall value to the consumer of the solution you invented for them.

But how do we construct our equation to find the mystical mathematical quantification that will help us place value on our solution?

We start by looking at the "traits" of Consumer Value - Quality, Convenience, & Cost

The first thing you notice about these three traits is that two of them (Quality & Convenience) are benefits to the consumer while the third (Cost) is a detriment.

Knowing that - expressed in a mathematical presentation we can use the equation “Customer Value = Quality - X – Convenience - / - Cost” or alternatively Value = Bene
fits -/- by Detriments


We know as consumers we’re always concerned with quality are the conveniences a product offers us. However, neither Quality nor Convenience can be offered without Cost. As a consumer suffers cost they often look to quality and convenience in an effort to logically justify their expenditure. In our formula we call that "Value".

So what does all this mean to you?

As inventors (especially product inventors) this relationship between Quality, Convenience, and Cost is something we should be thinking about very early on in the inventing process. In fact, It is one of the most important principles in guiding us towards inventions that have commercial viability.

Learn to apply this formula to every idea or invention you conceive. Just ask yourself did I build in enough quality and convenience to offset the cost resulting in good consumer value.  

Mark Reyland

Monday, October 13

Is Invention Home being a little slimey here?....

Let's talk for a moment about the number of ways you as an inventor can be snared by invention submission companies simply by typing in your email, often to an unrelated web site.
There are three main categories of email collection invention submission companies use to find you. The Unconfirmed Opt-In lists they purchase, the Confirmed Opt-in lists they purchase, and lists created from Opt-out harvesting sites or systems they have created themselves.
Let's take a look at these in a little more detail. 
Unconfirmed Opt-In
You are asked to join a mailing list and by entering your email you agree. Your name and email are then used for the recipient company to contact you with other offers, or sold to invention companies who then use that information to market products to you.  As you may expect, these lists have the least value in resale simply because people often use false email addresses.  
Confirmed Opt-In (COI)
You are asked to subscribe to a mailing list, but unlike unconfirmed Opt-In, a confirmation email is sent to verify it was really you.  In COI you are not added to the mailing list unless an explicit step is taken, such as clicking a special web link or sending back a reply email. These lists are again, often sold to invention submission companies at a much higher price because of their accuracy.
This is the data harvesting process that impacts you as an inventor the most because it's the form of slick data capture used most by invention submission companies.
Instead of giving people the option to be placed on a list, they are automatically added if they don't explicitly exercise their option to be removed.  What makes this an issue with inventors is the way these companies often mask the option to be removed. Sometimes it's way down at the bottom of the page, sometimes it's a muted color in the background, and sometimes it's hidden completely.
Probably one of the most glaring examples of how this process is used to ensnare you as an inventor into the jaws of the invention submission companies is a piece of software called Submit My Invention (SMI) developed by Invention Home.
Chances are you've used SMI and don't even know it. If you've submitted an invention idea to AllStar Marketing, Irwin Tools, Lenfest Media, Sky Mall, QVC, Rubbermaid, or many others you have submitted your invention to Invention Home as well - that is if you didn't see, or forgot to uncheck, this little box on the submission page.  
In  this case "Affiliate" actually means Invention Home. In fact, the submission page you used is hosted by Invention Home, not the company you submitted your idea to. The company you submitted to (like Sky Mall as an example) just logs into the server and looks at items you submitted under their link. If they accept the item an email from Invention Home will be sent to you notifying you of your selection.  If they reject your idea, and you did not Opt-out, Invention Home will start actively marketing their invention services to you.
I would love to tell you the companies using SMI are unwittingly feeding you to the wolves, but unfortunately I can't. They know full well they are feeding their rejects to a company that will then try to sell you "products" you likely don't need - of course I'm sure they would rather I don't tell you that.
I'm not saying don't use these submission pages, many of these are good companies simply using a bad system.

What I am saying is be aware of the processes you get involved in, look for the signs, and if you see an opt-in box already checked for you, ask yourself the question:  Who's actually on the other end, and do I want to deal with a company that has to rely on tricks to get me as a customer?
Mark Reyland

Friday, October 10

The Junkyard?

Several weeks ago I received a call from a New York television production company who was producing an “Inventor” show. They wanted to talk about their show premise and ask our help in getting the word out.
They laid out the story line and I listened.  “This is going to be so great” said the excited voice on the other end of the phone, “we are doing an inventor show that follows inventors while they hunt through the junk yard looking for parts to make their prototypes”. As I listened I could not help but go back in my mind to figure out if I even knew and inventor that had ever gone to a junk yard in search of prototype parts – and as I suspected I couldn’t come up with a single one. 
But the thought does bring up a good point – where do inventors get their parts and pieces to make those all important prototypes?
For me, it’s retail stores. I start by breaking the new idea down into functions. Then I figure out what kinds of products already made have those same functions. Maybe it’s a fully developed product, or an individual part from the hardware store. Either way, after a search of retail for the individual parts that match the needed functions, it’s off to the garage for a little deconstruction.
Taking my little treasure trove of products apart to extract just the function I need is actually a really fun part of the process. Maybe it’s a little motor I rob from a toy, or a hinge from a kitchen gadget or sometimes all I need is the package. No matter, it’s all part of the process of invention and the discovery of creating something new.
What I can tell you is that I don’t think this production company is going to get very far with their TV show, after all, even the best junk… is still junk.
You're an inventor - where do you get the parts and pieces for your prototypes?
Mark Reyland 

Thursday, October 9

Here's some Product Royalty math....

I recently came across a discussion about royalty rates for inventors that shed some light on how one company deals with their inventors.

First, let me say this discussion is about ASOTV products only. Second, let me go on record as saying I have been a long-time critic of Edison Nation and its owner Louis Foreman. In fact, in my professional opinion they are one of the worst companies in the industry.

That said - you don't need my opinion, you simply need to compare Edison Nation with accepted industry standards and you can form your own opinion. 

But we need to start with some facts. - The fact is: ASOTV products generally range in royalty rates from 1% to about 3% - The fact is: Even the worst of the worst ASOTV Product reps I've seen only take about 50% of your royalty. - The fact is: Royalties are normally paid to the inventor quarterly. - The fact is, royalties on ASOTV products are paid based on the on air price, while they are on TV and the normal wholesale price while they are sold in retail. For the sake of simplicity we'll use the on air price for our math example. 

So let's do the math using these facts first: The product sells for $10.00 and at 3% your royalty is .30 cents per unit. If you used a rep and you paid them the ridiculous amount of 50%, you will obviously receive .15 cents. In practical terms a product selling 100,000 units would generate 1 Million in revenue and $30,000.00 in royalty. Split that with the rep and you walk away with $15,000.00 for every 100,000 units sold. 

Now let's look at Edison Nation and the deal they cut with their inventors.

In all fairness we should start by reading the language in their contract:    

"If Assignee [EN] determines, at its sole discretion, that the Innovative Product has met or exceeded certain test criteria, then Assignee [EN] shall make annual payments to Assignor [inventor], subject to the terms and conditions provided in Section 3 of this Assignment, in an amount equal to: 7.5% of Adjusted Gross Revenues received by Assignee [EN]"

It's important to understand here Edison Nation generally does not produce, manufacture, and sell ASOTV products. Like many others, they normally act as a middle man between you the inventor, and the companies that actually do produce, manufacture, and market these products. A great example is Bacon Bowl, an invention Edison Nation brought to AllStar Marketing who actually developed it and took the product to market. Something the inventor could have done themselves for free by clicking this link  ....they are going to do the same deal with you that they would with Edison Nation.

Ownership aside, industry standard is to pay royalty on Adjusted Gross Revenue (AGR) Edison Nation is doing just that. However, the definition they use of AGR is a bit different than most companies. For retail products standard AGR is basically revenue adjusted for credit card charge-backs, returned items, and sales allowances. 

Edison Nation has a slightly different definition of AGR: "Gross Revenues less the sum of all Selling and Fulfillment Costs, Fees and Commissions, Patent Fees, Production Costs, and Returns and Bad Debts; any and all refunds, credits, credit card processing fees, charge-backs, and other allowances to customers arising from the return or rejection of goods or otherwise granted in the ordinary course of business, and less any attorney fees directly associated with a legal contract under which any Innovative Products or any of the Intellectual Property is commercialized."

Another industry standard is quarterly royalty payments. For whatever reason Edison Nation pays its inventors annually while the rest of the industry uses a quarterly standard. However, standards are just that, standards, not rules. Just because most people use a standard doesn't mean Edison Nation has to use that same standard. 

But Math?...Math is always Math - and that doesn't change. So let's take a look at the same math problem we used before, this time using the numbers Edison Nation provided us in their own contract. 

I have 100,000 units, selling for $10.00 per unit, same as before. The result is the same 1 Million dollars in sales. The royalty rate stays the same at 3% and results in the same .30 cents per unit - but the inventor split looks a little different. We remember at a 50% / 50% we received $15,000.00. But what does a 7.5% / 92.5% split look like?

For those of you without a calculator - It looks like $2,250.00 per 100,000 units - not $30,000.00 and not even $15,000.00. It appears your deal with Edison Nation will get you a paltry $2,250.00 per 100,000 units compared to their $27,750.00. That is of course of they didn't use that seemingly predatory definition of AGR to whittle your cut down even further.    

I'm sure I'll get a flood of emails about how I'm an Edison Nation hater. I'm not of course, but I do hate people who know better, taking advantage of those who don't. 

At the end of the day you don't need me or anyone else to tell you when we think you're getting screwed - after all, that's just our opinion. What you need is to read the contracts, understand the implications, and do the math!

Mark Reyland

If you would like to read through the entire Edison Nation contract - here's a link

Wednesday, October 8

.... Spooky

Okay.. so it's October and Halloween is just around the corner.

In recognition of this hallowed annual holiday I thought I would post an interesting "invention" I found floating headless around cyberspace ....well sort of.

One of the scariest, and most impressive, effects at haunted houses are ghost illusions, in which spectral bodies or heads appear to float right in front of you. While this trick, also known as Pepper's Ghost, is the secret behind the ghosts at Disney's Haunted Mansion, it is actually very easy to create yourself. The illusion can be done in a front window to spook people who come to the door, or it can haunt any room of your house.

Creating the illusion in an interior room

Step 1:

First, you'll want to create a video of a ghostly head. Stand in front of a backdrop of black fabric, and wrap more black fabric around your body so only your head is showing. Position a flashlight under your head and shine it up at your face. Turn off the room lights and turn on the video camera. The extreme shadows created by the flashlight will make your face look absolutely diabolical. Be sure to move your head from side to side while filming so the ghost effect has a lot of movement.

Step 2:
This illusion works really well in a doorway, so people can be spooked as they walk from room to room in your haunted house. Place a table at the doorway, and position a laptop or TV monitor to the far left, so that the screen is facing right. It is a good idea to place the screen on a stack of books so that the ghostly image will be higher than table top height.

Step 3:
They key to this illusion is reflection off of a clear surface, which is where the plexiglass comes in. Plexiglass in a picture frame is easier to handle than a plain sheet of plexiglass, and you probably have one around the house. Position the plexiglass at a 45 degree angle from the laptop or TV screen. Secure the frame in place with stacks of heavy books on both sides so it doesn't fall down. Turn on the video, and you will see the ghostly image reflected in the
glass. Adjust the plexiglass or laptop as needed to get the ghost image exactly where you want it.

Step 4:
Cover the books and laptop keys with black fabric, so these tricks of the trade are hidden.

Step 5:
Frame the doorway with more black fabric to conceal the edges of the plexiglass frame and the existence of the laptop screen. You can hang the fabric with a tension rod in the doorway, or with push pins.

Step 6:
Play the video, and the ghost appears between the curtains. Play with the lighting in the room; if the room is dark, visitors will only see the head. But when there is light, it can actually be spookier, as the head appears to be floating in the room

Thanks to the good people at - read more about how to create this illusion on a front window at :

Tuesday, October 7

Hand me that Donut...

I'm 52 years old - not really old by any standard except maybe that of social networking.

My kids all use this network of often useless communication, even my young nieces and nephews effortlessly navigate their way through this labyrinth of web sites called social networking - all designed to make our life a little more "excessable"

I suppose it's nice to see pictures of friends, and find out what old acquaintances have been up to, but how is this set of seemingly interconnected tools useful to us as inventors?

Let's take Facebook for example. I host several Facebook pages for inventor groups. I also syndicate this blog each day on many of the inventor Facebook pages. So, I guess as an educational outreach tool Facebook has some value to us as individual inventors and by extension to our industry.

Who knows, maybe you're reading this blog because you found it floating around the social network. If so - Thanks!

My friend Mark Gill posted this image the other day and it made me think 
 - If I really understood what these things were, and how they are properly used, would I be able to harness their power of communication to help me commercialize my invention?

What do you think?

Monday, October 6

That is one ugly camper....

We talk about innovation all the time, and as inventors we often talk about our inventions and how they will change the world!

But what if the invention is not going to change the world? what if it's simply going to prove something to ourselves or scratch that itch we've had to see if something works?

Those are both very valid reasons for inventing something of course - but changing the world, scratching an itch, or proving something are the most obvious reasons - what if the invention accomplishes something far more important? some may say - far more lasting.

What if our inventions simply inspires?

Take a look at this video of an ugly yellow 1974 VW bug modified to pull an ugly yellow camper. It's kind of stupid in a pragmatic sense since the market for people pulling campers with their VW is, I would assume, very small.

But, as you watch this video catch yourself traveling to a place that has nothing to do with campers or cars.

As your mind takes you to a place where the agility of the camper and the interaction with the car inspire you to apply these principals in a way that solves a problem you may not have even thought of yet. Strip away the car and the camper and let your mind become inspired by the core function of the invention. 

Are we all going to strap an ugly yellow trailer to our VWs after watching this clip? No, but we may just walk away inspired to invent something far more important.

Mark Reyland   

Friday, October 3

That's a little Wacky!

We all dream of having the next big thing, and we all want to have a wildly successful invention. But sometimes inventing something that has little or no practical use is actually more fun.

I’m sure the inventors in this clip were proud of their accomplishment – even if those around them may have thought they had finally lost it

Enjoy this look at the wacky side of our industry… and I think you will be as surprised as I was at the answer to the question about “Backrub”

Mark Reyland

Thursday, October 2

Just do the math...

So much of business can be boiled down to a simple math problem – and since the process of successful inventing always ends in the process of business it just stands to reason that in the end, your invention is going to end up as a set of numbers.

With that in mind I thought I would take a few moments and explain how a manufacturer takes your great idea and uses objective math to take out all your subjective emotion.
This image is a representation of the pricing and cost worksheet used in evaluating a product for market. The math adds to itself from the left of the chart until you get to Fulfillment and subtracts from itself from the right of the chart starting with Sell-In Price.
Start from the left side [ MFG Cost (+) Display (+) Freight (+) Fulfillment] then go to the right side put in the MSRP and fill in the rest of the variables [Sell In (–) License Royalties (–) Discounts (–) Sales Commissions =]  
Now that we know how the equation works, let’s take a look at each individual area so you can better understand what goes into each number.  
MFG Cost – This is the basic manufactured cost of the good from the factory dock. It includes the product, packaging and freight packing.
Display Costs – This is exactly what it sounds like, the cost of a display you would provide to a retailer. If the display holds 20 parts, each part is responsible for 1/20 the cost of the display.
Freight Tariffs & Taxes – We use all 3 of these values in this space because it allows us to accommodate importing. Basically, this cost is from the factory to your warehouse. It is NOT the freight cost to the retailer – they normally pay that themselves.
Fulfillment – This is the cost  warehousing, billing, coordinating the manufacturing, reporting, auditing, and disbursement of funds.
Sales Commissions - Most professional product reps will get between 5% and 15% of the Sell-In price as commission.  
Discounts – Not used on every product, but often a retailer will require manufacturers to offer a discount for shipping or advertising when they place large orders.
Royalties – This amount can vary between 1% and about 10% based on a number of factors. Either way it’s a cost, so it has to be factored in.  
Unit Cost – All those things accounted for, it’s the final cost to the manufacturer
Sell-In (also called Wholesale) – The price the product sells for to the retailer.
MFG Gross Profit – The delta between the Developed price and the wholesale price
MSRP (Manufacturers Suggested Retail Price - also called Retail Price, or Consumer Price) – The price the manufacturer recommends the retailer sell the item to the public for
Retail Gross Profit – The delta between the wholesale Price and the Retail Price – keep in mind this is the gross profit for a retailer. It’s not actually the number they use in figuring out if they should take on the product.  Retailers use “Net Profit” and they have a very strange way of calculating it.  MSRP (-) Sell-in (/) MSRP = Retailer Net Profit
It all looks a bit more complicated than it really is, but it’s the mathematical equation every manufacturer uses to decide if the product they are developing can make money or not.
So next time you have that great idea you just know will make tons of money – Do the math. After all, it can be the greatest product in the world, but if you can’t get this math to work properly it’s never going anywhere.
Mark Reyland

Wednesday, October 1

Brennan has a question....

I am a prospective inventor myself and really found lots of informative questions for self evaluation from your post. I do have a few questions though. How does one calculate an accurate value proposition? Also, as my funds for prototyping are limited, is 3D printing a good medium for rapid prototyping or is there a more efficient way to bring forth low cost plastic prototypes?


HI Brennan - let's see if we can get you some answers. 

First, Value Proposition isn't really something you can "calculate", it's more of an overall package of value we look at in a product.

A great example of that is Intrinsic Value. This form of value comes from something the consumer "feels" more than "knows". Say you have a product made of plastic. You construct it of obvious thick durable plastic that the consumer sees clearly when they pick it up. We all know that thick is more durable than thin, so that knowledge itself is what gives the product intrinsic value to the consumer, helping them logically justify their purchase.

As you can see from this example you can't measure the customer's intrinsic value because it's different for everyone - but it's a very important part of the value proposition. 

Second, 3D printing is a very effective way to build low cost prototypes and dial in design changes - however, before you spend money on that, make sure you actually need that level of prototyping. To license a product all you really need is a homemade proof of concept. 

Hope this helps Brennan! 

Mark Reyland

Tuesday, September 30

What? a Consumer Products Group

As inventors we sometimes think the product world is big stores and brand names. It isn't really, it's big business and hundreds of thousands of people looking for great new products.

Recently a marketing company named Affinnova conducted a survey of 400 people who work at what the industry calls CPG's - Consumer Products Groups. These groups generally live outside the door of major retailers and through their relationship with the retailer use their understanding of the category needs to find new products. (I know what you're thinking, and yes, CPG's always want to see new products, but they don't generally like working with inventors)

You would think a CPG would be hyper innovative, but as you can see from this survey, not always.

Many people developing new products at CPG companies feel frustrated and demotivated according to the survey, which probably comes as no surprise given the high failure rate in the trade. But looking at what firms that produce more winners have in common could help boost everybody's mood, claims Affinnova.

In a global survey* of 400 people working in the innovation function at CPG firms of all sizes, Affinnova found that “most CPG innovators we surveyed are clearly frustrated with their companies’ current processes and lack of competitive advantage.

“In fact, 40% admitted they are currently considering leaving their companies to work for more innovative companies. No doubt lack of engagement and low morale are also having an impact on performance.”

Poor tools, lack of consumer data, subjective decision-making…

Among the biggest areas of frustration identified by CPG professionals in Affinnova’s survey were:

• Inadequate tools: 75% felt their companies were using outdated technology for innovation. 76% were also dissatisfied with collaborative practices in their organizations.

• Slow processes: 49% felt that their companies were unable to move fast enough to keep up with competitors and the pace of the marketplace.

• Lack of creativity: 62% said creative risk taking was not supported by their companies, limiting breakthrough ideas.

• Subjective decision making: 55% believed that internal politics— not data—was guiding most new product decision making.

• Limited customer insight: 66% believed their company wasn’t doing enough to understand consumer needs.

The good news is that retailers are slowly moving away from the outdated forms of Open Innovation and towards a new innovative structure of Adjunct Innovation that will eventually provide the tools these CPG's need, and a more direct path to the retailer for the inventor.

Mark Reyland

Monday, September 29

I "invented" the Skateboard

Ok, I was 12….I didn’t actually invent “the” skateboard. I invented a version of the skateboard for my older sister Susan.

As you would know from reading these silly childhood stories about my wacky adventures, I have an older sister named Susan.

Susan is a doctor of Psychology now living in Denver Co with her three beautiful little girls.

But back in 1974, Susan was a trusty sidekick willing to get involved in almost anything I happened to be dragging her into at the time.

So, when Susan saw one of the kids on the block who had a “board with wheels” rolling down the street she asked me if I could make her one - I of course said Yes.

Simple enough, back then we had roller skates that were all metal. They had an adjustable rail to fit them over your shoe and that’s what we skated with. Susan donated her set of skates and I found a board in my Dad’s pile of woodworking lumber and set off to the garage to fashion my older sister a skateboard.

First, I had to cut the board into a shape that loosely resembled a long rectangle. Then, it was all about “Modifying” those skates. Off came the straps, and the metal slide – a very large hammer would help me "convince" the metal brackets to lay down and be quiet – and they did. Some screw assembly and a few nails and it was ready for a test ride.

I called Susan out to the garage to test out her new skateboard. She was so excited that she jumped right on. The board promptly slid out from under her feet and she hit the floor with a loud “thump” followed quickly by an ear piercing scream the likes of which I have not heard again to this day.

My Father came running out of the house, quickly assessed the situation to make sure Susan was alright - then looked directly at me. With a glaring “not again” stare he proceeded to pick up the Skateboard and with one swift and powerful swing broke it in two over the workbench....he was really mad.

Ok, so I got grounded – again. I’m not sure how it happened, but in addition to my traditional post invention grounding, I had to cut the grass for two weeks to earn enough money to buy Susan a new pair of skates.

Life is simply not fair sometimes – but somehow the experiences make it all worthwhile.

Mark Reyland 

Friday, September 26

Lincoln and that damn beard

In 1860, Mr. Milton Bradley was a successful lithographer whose major product was a portrait of Abraham Lincoln.
When Mr. Lincoln grew his trademark beard, Bradley's clean-shaven portrait was no longer popular. Out of desperation, Mr. Bradley printed up several copies of a game he'd invented called, "The Checkered Game of Life." Its immediate popularity put Milton Bradley in the game business. This was Milton Bradley's first game. He sold 45,000 copies of the game by the end of the year.
In 1959, Milton Bradley executives asked freelance toy and game inventor, Reuben Klamer, to come up with an appropriate game for the 100th anniversary of the company. Inspired by a "Checkered Game of Life" game board he saw in the Milton Bradley archives, Klamer and a co-inventor developed The Game of Life® which was introduced in 1960. In 1992, The Game of Life® was updated to include Life Tiles which reward players for recycling their trash, learning CPR and saying "no" to drugs. Today, The Game of Life® is played all over the world in some 20 different languages.
The original Game of Life is part of the permanent collection of the National Museum of American History of the Smithsonian Institute. – I bet Milton would never have guessed it would end up there.
As is often the case in inventing, Milton Bradley started off down one road and quickly had to change his strategy to adapt. In his case it was Lincoln and that damn beard. But we all face similar situations where something (okay…not normally facial hair) changes the direction we’re headed with our inventing.
This new direction is often frustrating and exciting at the same time. We have little understanding of where it may take us and the impact it may have on our end result, but like Mr. Bradley, if we adapt and press on it could lead us to places we never dreamed.
So buckle-up and let the inventing journey take you where it will.
Mark Reyland

Thursday, September 25

Hey Mark – Will you take a look at this?

As you may expect, I’m asked every single day to evaluate products for people. I really don’t mind helping – but what I like better is giving them some questions to answer that should lead them to be able to evaluate the idea for themselves.

This is important because I know from many years of working with inventors that if they can learn to ask themselves these critical questions and assemble some basic data – they will be much better at evaluating these ideas on their own and ultimately better at developing products themselves.

Here are a few of the questions I ask inventors to answer....

What are the problems this product solves for the consumer?
What are the demographics of the consumers who would use this product?
What are the key benefits of this product over what’s currently available to the consumer?
Why would the consumer buy this product - what's it's value proposition?
What price is the market currently supporting for like products?
List the benefits of the product (such as convenience, time savings…) and the detriments of the product (such as storage or price) in order of their importance to the consumer.
Create a "Market Audit" - find EVERY comparable product on the market and list – Price, Retailer, Size, Colors, Manufacturer, Product benefits, Product detriments, and the Pro’s/Con’s between your product and that product.
If you take the time to assemble this data and honestly answer these questions, you are creating a process for yourself that will allow you to evaluate your future products in a way that is based less in emotion and more on you won't need me.
Mark Reyland

Wednesday, September 24

Sound advice....

We all know how slippery a slope the commercialization process can be. The licensing of an innovation or an invention to a company can be not only slippery, but scary as you traverse waters you may never have been in before. Roger Brown recently wrote a list of things to do (and more importantly not do) when approaching a company with your next big idea.

It’s sound advice from a very successful inventor

1. Understand that inventing is a business. Treat it like one.

2. Actually research your idea before you send it to a company. Don’t tell them “There’s nothing out there like this!” When spending 2 minutes on the web they find several items exactly like yours.
3. Understand every company has a different method and time range for reviewing submissions. Don’t send a proposal on Monday via snail mail and call them Tuesday at 8:30am wanting to know when they will be sending you a contract. It is a simple task to ask the company you are submitting material for review “What is your normal turnaround for reviewing submissions?”

4. Don’t be married to your product and totally against changes to make it marketable.

5. Put your contact information on every item you send them. Don’t make them guess.

6. Don’t send prototypes unsolicited. Let them know a prototype is available upon request. You can’t expect a company to pay shipping for every prototype they receive unsolicited.

7. Understand every idea is not a million dollar idea. Yes, there are million dollar ideas, but they are not the majority of ideas. Be realistic in your expectations
8. Realize everyone that rejects your idea is not stupid.
9. Don’t send a 20 page explanation of your product. Be concise and clear on your sell sheet. If it takes more than two pages to explain your idea you have a problem.

10. Know who you are sending your submission to in the company. Don’t assume they will figure it out for you if you just send it in care of the company.

Mark Reyland