Downsides to Licensing Your Product Invention

Industrial product design sketching in SOuth Florida office

While licensing may seem like a great way to go there are downsides to licensing your product

You may not have control of your product Many times, you’ll have no control over the packaging, distribution, cost, sales, marketing or even how the product is produced. Many products don’t get produced A company may even go a far as licensing your product, but never put it in production.You may not get any payments or if you do it may be very little Meaning your product might not do well or no one wants to buy your product. No sales = No royalties.

What is a Licensing Agency

Licensing can be simply defined as a business arrangement in which one company gives another company permission to manufacture its product for a specified payment. Licensing allows you to use the existing production, distribution and marketing systems that other companies have spent time building.

What do You Get In Return For Licensing Your Product?

In return from using their resources you would get a percentage of the revenue from products sold under your license. These licensing fees are usually a small amount of the overall sales but can quickly add up.

Calvin Klein is a Great Licensing Example

A good example of a company that takes advantages of licensing is Calvin Klein: roughly 90 percent of the $160 million a year in sales at Calvin Klein Inc. comes from licensing its brand name to makers of underwear, jeans and perfume.

One of the downsides to licensing your product or services is that you settle for a smaller piece of the pie. Overall Calvin Klein generates $5 billion in sales a year and the over whelming majority of that money goes to licensees and retailers. Next, we will discuss the difference between what services a licensing agency and a design studio provide.



Industrial design studios are defined as a workplace for designers and artisans engaged in conceiving, designing and developing new products or objects. A licensing firm is focused on the legalities of the products, design firms are more interested in getting their hands dirty and actually creating your product.

Industrial Design Studio

For instance a full service product design studio will generally specialize in all aspects of product development. Unlike a licensing agency promises you that they will find someone to buy your idea from you, a design studio will help guide your idea from initial concept all the way to manufacturing.

Design studios empower their clients with creative design solutions that will help thrive in a competitive market. Design studios consists of talented, highly-trained professional creatives specializing in aesthetically pleasing easy to manufacture products that are highly patentable. Graphic or Visual Designers They create masterpieces of color and depth. These designers are the ones working on the drawing tablets. Motion or Animation Designers The work they do is a cross between graphic design and video editing. They’ll have you ohing and aahing over that slick transition. User Researchers User Researchers gets to the bottom of everything. They dig into the mind of your customers and ask the difficult questions. Data Analysts They are the scientists of Product Design. They collect and make sense of all the data. They are the masters of correlation and causation. Prototypers These are the ones who create tangible products quickly and with ease, usually with the help of 3D printing and other rapid prototyping tools. This is an essential part of the product development phase. Business Strategists They are the ones that at the end of the day answer the question “Why are we really doing this?”.

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