There is WAY more wishful thinking than science in this topic.  The way I've seen it done is:

• guess at the annual demand
• estimate the capital required to tool up
• divide the cum demand in the first 7 years into the capital requirements (capital per unit at a zero discount rate)
• estimate the direct costs that go into making one widget
• assume overhead is equal to direct costs
• add all of the above costs and multiply times a "royalty" number (I've seen numbers from 10% to 20%)
• finally, add the royalty to the total costs and double it--this is the retail price, is it in any sort of rational ballpark?  Would lowering your royalty requirements move it into the ballpark?  Does the royalty give you an adequate return on your investment of time and brainpower?

Remember, you won't get what you deserve, you'll get what you negotiate.  Sometimes royalties are per unit, sometimes per year, sometimes they are a one-time only event, sometimes they include an up-front fee followed by a per unit (sometimes with an annual minimum).  The above technique will let you put a reasonable value on any of the options (i.e., if you can come up with a per unit royalty that covers your development cost and gives you a fair return, grossing it up to an annual or one-time value is a simple NPV calc).

I would say that there are as many different ways to do this as there are inventions that make money (most don't).  Good Luck.

David

It is interesting I have a similar situation. My PhD thesis has now been accepted and degree conferred. I am looking at a book option and have contacted leading engineering publishers in the UK. I have no contacts in the US in this area. I would welcome hints and advice.

As for patenting I have no previous experience but will appreciate any feedback on your query.

Neilly Davies Consulting Engineers http://www.neillydavies.com.au

If you have working prototypes of your product ready, send them to "qualified" interested companies.  That way, you just see if there interest in the market for your product.  If you get positive feedback, then negotiate on the basis of percentage of gross sales for the license to use your patent.

Or better yet, find yourself a Capital Venture Fund and pitch your product.  If the people at the VCF think the product can make money, they will invest.

Nothing better than the market to select your product's marketability.

My 2 cents.

I agree with dogtop - in reality patents are only worth what someone will pay for them.

The "real" money is made is someone infringes your patent.

The problem then is it's only the lawyers make the money!!

H

www.tynevalleyplastics.co.uk

Remember, your patent is only as good as the lawyer or patent agent that wrote it. A good portion of my job is designing equipment to get around other people's patents. I think if it is a quality fundamental patent it could be very valuable. It also depends on the area of patent. If you can add many more patents around it you may be able to block many competitors from entering the area. Also, a patent gives your the right to exclude other people from making or using your product/idea. It can be expensive to fight these battles. You have to ask yourself if this is a fundamental and valuable patent or one that is easily designed around? If you allow the information to get out others may start to file patents. Be sure to get Non-Disclosure agreements if you discuss your ideas.

In today's world economy the value of pattents has changed quickly and dramatically. A good idea will be copied within days of it hitting the market and there is nothing you can do about it. The copiers dare you to sue them, if you can find them. Patents only have value when there is integrity in the market and that integrity has been destroyed.
A large number of great ideas get killed because the developer can't finance their marketing, and investors know this. If you can't get a product to market quickly and get your money out within a year then no seasoned investor will buy into it.
The rules have changed. Greed, corruption, lack of integrity, lack of professionalism, and even desparation now control economics.
No matter how good the idea, if you can't finance its' development yourself, or with angels, then you stand little chance in the marketplace.
The tragic reality is that in today's uncivilized society, on most Balance Sheets patents are worth the paper they are written on. Ask your lawyer.
 

You should watch a movie called "flash of genius".   

Never, but never question engineer's judgement