How do I sell my idea?

If you have an idea, you cannot just send a company an email and offer to sell it to them.

First, you need something to sell

No-one buys “ideas” or “concepts”. But, companies do buy patents and designs. You must convert your idea to an “asset” that can be sold. Without a patent or design, your idea is not protected – if the company you approach does not “steal” the idea from you, that company’s competitors will certainly steal the idea from it, should the company be naive enough to buy an unprotected “idea” from you and launch the new product / service.

To convert your idea to a patent or design, you can approach a patent attorney. Alternatively, you could simply describe your idea in a document, upload it to an online provisional patent filing system, and get a Patent Pending Number through either GlobalIPCo for only $199 / Iptica for only $99. Within a day, you will have an asset to sell. See our provisional patent drafting and filing guide.

Getting a Patent Pending Number is generally a good idea. If your idea is patentable, the Patent Pending Number reserves your right to file patents worldwide for 12 months. And, if the cost of filing complete patents cannot be justified, the Patent Pending Number is still useful for deterrence and marketing.

Second, ask target companies to sign a NDA

Even though you have a Patent Pending Number, you should still ask companies you approach to sign a confidentiality undertaking / non-disclosure agreement (NDA). Why? Because, concluding a deal to sell your idea may take longer than 12 months (the life of a Patent Pending Number).

Use our free NDAs, or get a “SuperNDA, which includes restraint and intellectual property assignment clauses.

Third, put together a great presentation

No-one is impressed by a short description in an email. You can and must do better. You have only one or two shots at “showcasing” your idea. At the very least, create photorealistic posters explaining your idea and showing how it could be made; also consider creating a prototype; or better still, create a professional video explaining your idea.

Our product developer can bring your idea “to life”.

Fourth, either license or sell the idea

It is simpler to conclude a licence than a sale. The reason is that a licence does not require the company to forecast sales to determine a sales price. Instead, you merely need to agree upon a royalty to be paid per product sold / service rendered. If the idea flops and there is no market, no royalties are payable.

Use our free licensing term sheet to negotiate a water-tight licence.

Fifth, don’t get too greedy

Be reasonably when negotiating the sales price / royalty rate. If your idea is protectable and able to shield the company from competition, it may be worth up to 33% of the profits generated from the sale of products / services. But, this is exceptional.

See our royalty rate table for reasonable “comparable royalty rates”.

Sixth, don’t get too complicated

Keep things simple. Don’t register companies to hold your intellectual property, and forget about offshore tax structures. Focus instead on licensing or selling your idea.