Has anyone produced a backpack?

[sparechange]

Sample would have to be under a hundred bucks no? Retail I'm paying under that for a hiking bag, material cant be that expensive.

Could be totally wrong though, some bags go for $500+ so.....

 

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[Woodsman81]

Can you learn how to stitch? Make a sample yourself maybe, could be a fun project...get a bunch of cheap backpacks / rip them

I already did this.

 

[Woodsman81]

Sample would have to be under a hundred bucks no? Retail I'm paying under that for a hiking bag, material cant be that expensive.View attachment 21298

Could be totally wrong though, some bags go for $500+ so.....

There is allot of pattering that goes into making a sample. It not just the cost of the material. Manufacturers are going to want to get paid for their time in case you do not use them to produce your product.

 

[sparechange]

Keep us updated, would like to see the progress of this

 

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[markK]

I was having no a hard time finding someone to make me a sample or a prototype. I decided to get a provisional patient. To protect my idea . This allowes me to go to existing backpack company's.
I have approached one so far he liked the idea and said to give him some numbers on roylities.
I think I would prefer per sale royalties vs lump sum. I feel like I need two different numbers exclusive and non exclusive.
Does anyone have experience with this or have any suggestions on what I should ask for?

It sounds like you're considering going the licensing route like I mentioned back in my post on April 14.
I think that is a good choice considering that your idea is a design modification to an existing product...a backpack.

I will give you a few quick thoughts for your situation, but if we can get @Rearden to chime in on the discussion, he can tell you pretty much anything you need to know about product licensing. He's very knowledgeable on the subject. Also, if it wasn't for him I wouldn't be here on the forum or have read Millionaire Fastlane and Unscripted , so I am very grateful for how he's helped me.

First, it's great that a company is interested in your idea!
That means that they see a potential opportunity to make money.

Second, I would suggest you make a list of all other companies that make backpacks that could have an interest in your design ideas...then contact them and ask them if they look at new product ideas from outside the company. If they say, yes, ask who you should contact to discuss your idea with.
If you have more than one company interested, you have more opportunity for a licensing deal and hopefully one that has great sales and distribution.

Third, if you can, find out if the company that is interested in your idea has ever licensed ideas before and if so, what did that agreement look like...royalty rate, distribution (exclusive/non-exclusive), length of agreement, etc. This will be a starting point for negotiation.
If they haven't, this is where I can give you some guidance, but @Rearden could really help you and I would suggest sending him a PM. Although, he may be somewhat restricted because he advises inventors through the licensing process for another company.

Fourth, keep records of all your interactions with the various companies. emails, contact names, details that you discuss, follow-up dates, etc.

Now, to give you a general answer to your actual question.
Generally, product ideas that are licensed will pay royalties in the range of 3-7% of the wholesale price of the product, which is usually half of the retail price.

For example: If your backpack sells for $100 in the store (retail) and the store purchases them from the manufacturer for $50/each (wholesale) and you agreed on a 5% royalty, then you get $2.50 for every one that they sell. If they sell 50,000 backpacks, then you make $125,000 (50,000 x $2.50)

There are a lot of other things to negotiate into a licensing agreement, but that gives you a picture of the royalties. Having a company that has a large distribution becomes important because they are in Control of the sales volume, which is how you will make your money.

Let me know if you have any other questions.

 

[Rearden]

I am here to help however you need. I have advised hundreds of people through licensing deals and have a handful of deals myself that are presently paying royalties on my own inventions.

Buyouts rarely happen and can be detrimental to striking a royalty deal. When Buyouts are brought up there is a very distinct difference in the mindset of both sides.

Inventor Mindset: Future Value of the product so they look at what is the possible value worth by taking projections of royalties. If we take @markK example:
If your backpack sells for $100 in the store (retail) and the store purchases them from the manufacturer for $50/each (wholesale) and you agreed on a 5% royalty, then you get $2.50 for everyone that they sell. If they sell 50,000 backpacks, then you make $125,000 (50,000 x $2.50)

Then Inventors take the $125,000 times 3 or 5 years...so let's call it a 3year multiplier of royalties equals a $375,000 buyout price....Makes sense right?

Company Mindset: Present Value of the product from the companies viewpoint. They look at if you have invested in IP (Intellectual Property) then if you have molds or patterns and a production-ready product...SO then they do a calculations
IP investment - $10,000
Molds or production ready model - $12,000
Your work $5,000
Their Buyout price $27,000 (if you have done all the work and made the investments)

With a Buyout price difference so big each party starts to dig into what they want and it deteriorates the relationship and makes it difficult to return to a royalty licensing model. I have seen this on multiple occasions and when the inventor tries and returns to a royalty rate the company is so focused on the buyout and the simplicity of it, the deal never makes it back to agreeable terms.

I have seen buyouts but for the most part, they happen on products that are presently selling on the market and a buyout value can be determined based on actual sales and not speculation of possible future events.

I hope this helps and let me know if I can help in any other way.

 

[sparechange]

Great advice here, lets do it

 

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[Woodsman81]

Thank you @markK and @Rearden that is exactly what I was asking.
Honestly I was hoping it would be the retail price.

 

[Woodsman81]

Update
The first licensing agreement did not work out so I slowed my roll and educated myself by reading the book one simple idea. I have made 3 cold calls and sent my sell sheet to 2 companies. I have a meeting later this week with a potential licensee to show my crude prototype to.
I was really surprised at how hard it was to make that first cold call but the second was allot easier.

 

[Kolslaw]

Maker's Row. The company I worked with solely does clothing, so they wouldn't be able to help with backpacks. Never heard of this Frankenstein backpack thing. But yeah, building a backpack seems significantly harder.

@MakeMoreMoves - Were you referring to the Clothier Design Source? If so what has your experience been like working with them? Also, like many I have fear of them stealing the idea...is that a concern? Thanks,
Dave

 

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[Rearden]

If you need help closing your licensing deal I have helped negotiate over 170 deals.