What is Product Licensing?

Basically, Product Licensing is a business model used by many Inventors and product developers which is a proven way to get your idea/s to market, but not by opening and running your own business.

In the US and other countries, the term for manufacturing, selling and managing your product yourself is known as venturing, i.e. you open and manage your own company.


Licensing is a different business model to venturing. By Licensing your product, you essentially rent your idea to an already established company. It’s likely that this company is currently selling their own similar products online and in stores, and so they already have capacity, and if they license your idea, they then agree to take your product to market in exchange for paying you a royalty payment based on the wholesale price of each unit they sell.

The Licensing Agreement you draw up with them will cover all aspects of the arrangement. You would then be the Licensor and when ‘they’ become your Licensee, they’ll generally take care of (and of course it will vary from project to project) further R&D, possible IP protection, manufacturing and production, marketing, sales, accounting, distribution, staffing and more.

There are some well-defined steps or principles to Licensing that are practised internationally (generally from 8-15 Steps) depending on who you follow; and once you have mastered them, then you can repeat the formula as you continue to earn from your creativity.

Even though Licensing is a popular alternative to opening your own business both ways of doing business take an entrepreneurial mindset and a lot of ‘you-based’ hard work.

When it comes to Licensing, no matter how many steps you identify, they are all important. Having a set path to follow and a diligent and consistent mindset, you will certainly get where you intend to go! There are professional companies who teach the invention process and coach on how to manage the Licensing business model – just Google ‘product licensing coaches’ and you will find them easily.


Don’t be fooled by the seemingly easy formula described above. There is  great deal of work between coming up with a good idea and signing a Licensing agreement! There is so much information and free resources available about Product Licensing to assist you as an independent inventor. You just need to look for them.

CAVEAT! You need to do this work yourself. Do NOT pay money upfront to any ‘submissions company’ that says words like “Give us your idea and we’ll do the work for you and we’ll get it to market for you!” They won’t. You may lose everything. Beware of scammers.

Watch this short video from
Stephen Key, Co-Founder of inventRight.com