SOT. New circuit... How to capitalise on it?

[Mark Hammer]

My advice is to start by selling it through any local outlets and making the pedal a "local legend".  Certainly one hurdle that skips is factoring in shipping costs to the pricepoint.  You'll also have a MUCH better idea of just exactly what your local comparables are and how to market it, plus enough customer contact to be able to incorporate user feedback.  Certainly there are places like pedalgeek, musictoyz, etc etc that concentrate on booteek pedals, but finding one distortion/overdrive amidst their stock is a bit like looking for a "cute girl" in a Google Earth photo of Beijing.

[R.G.]

Let's think logically for a moment.

There are three parts to commercial success - knowing how to make something, having the ability to make things in sufficient quantity, and having the commercial machinery to sell it. Which is least important?

It's the first - knowing how to make something. Making money selling things is about running a business, NOT having the best product, although a quality product helps. But it's not necessary. How many vendors of what is frankly useless, trivial junk are there?

The internet has caused a mini-boom in people going into low-volume business because it has made advertising to lots of people easy and cheap. It has reduced the cost of entry down to the price to put up a web site and to build/make even one thing at a time that someone else somewhere might pay money for. Unfortunately it has not done much for the rest of running a business.That's still hard work.

Commercializing an idea requires
(a) the working idea, reduced to practice
(b) a means of producing the result in economically significant quantities
(c) the sales machinery to advertise, sell, and service the products

How to commercialize an idea? Well you have the idea. Here's the rest.

- Do some math. How much money do you want/need/expect to make? If it's a little and temporary, great, make a few, sell them and use the profits to bootstrap your production up to make the money you want/need/deserve. If it's a significant fraction of a living wage, do some planning for how much time and money you're going to have to put in up front to get the returns you expect. How many units per month/week/year are you satisfied with? Can you realistically sell that many? If you can sell that many...
- ... can you make that many? How much labor goes into each unit? Make one, time yourself, and consider that  you're paying yourself  at least skilled-labor wages. Once you know the parts AND labor AND cost-of-sale content, and compute out where that will get done. Making them one at a time on the kitchen table or in the garage is only apparently cheaper because most people don't count the cost of their own labor. And the quantities are necessarily limited. That first step of deciding how much is enough above is important because the laws of economics are as immutable as the law of gravity. If you need a full factory with custom tooling to turn out enough of them economically enough, you're going to have to start with a few million dollars to go right to that level of production. If you are satisfied to get rich slowly, you can do the zero-cost bootstrap version and go from garage to contract assembly to full scale production for hire, using each stage to accumulate the funds needed to get the next one started. This puts off the rewards a lot because every dollar you take out for you puts the next stage off in time.
- Once you know how to make enough of them design how you're going to sell them. Making something you can't sell is just about as bad as selling something you can't make. In today's very crowded boutique effects market, just putting up a web site with glitzy graphics is not as good as it once was. You'll need a web store at least, a lot of time in forums doing guerilla marketing saying how good the Whatsit is as though you had no association with it, pumping time on Harmony Central, tracking down artists to get endorsements, and so on. You'll need the ability to collect the money, ship them, and service the bad ones. There will be bad ones, after shipping if not before.

In short, saying "I have the world's best (fill in the blank) how do I commercialize it?" amounts to saying "I've done 5% of the work of getting some money back out of this idea. How do I do the rest?" It's kind of like the old joke about the man in New York City  who stops another guy and says "Hey, how do I get to Carnegie Hall?". The reply is "Practice man, practice." The most of the work is ahead.

Making an alliance with someone who already has some or all of the mechanisms needed to produce and sell the idea is a quicker way to get your idea out. But it is a lot less reward.

[audioguy]

RG- Great info for any business!

[Mark Hammer]

Unfortunately it has not done much for the rest of running a business.That's still hard work.

Bingo.  The ease with which people can throw up a web page or e-bay ad and think they have gone into "business" reminds me of the way that students typically thought (and many still do) that if what was on the page looked "professional" by virtue of being printed on a laser printer with some snazzy graphics, that the sheer absence of any cogent (or coherent) content inside would not be noticed or worse, not even necessary.

That's not to cast ANY aspersions on brett or anyone else here who may have taken that first bold step or is considering it.  Rather, the point being made is that it is all too easy to be fooled into thinking one has done the hard work when the hard work is still there waiting for you.  RG makes a fair point that you need to start by considering where you want this to go, and harnessing your plan to that vision.

Personally, I still think that starting out local:
a) Pisses off fewer people
b) Allows for less likelihood of IP theft before you've even gotten off the ground, and momentarily sidesteps many other IP issues
c) Lets you check up on your distributor and know how the stock is moving
d) Lets you factor out shipping costs and keep the retail price and repair/modding costs down
e) Lets you make better use of customer feedback
f) Not be sucked into higher volume production and inventory cost control prematurely

I suspect many of the booteek houses we all admire all started out this way.  F'rinstance, our very own Zachary Vex can tell you that he started out almost selling direct to individuals, and spent countless hours driving around to music stores delivering product.  Of course, the recommendation to start local would depend on what "local" is to you and what sort of music scene there might be that would avail itself of your product.

[idlechatterbox]

You never *have* to patent anything. In fact, unless you're a huge corporation, there is no sense in patenting anything.
If you want to get a patent, you need to consider: Do I have the financial means to hire lawyers to defend my patent in court for 10 years? If not, getting a patent is a waste of money.

The only function of patents these days is to enable big corporations to destroy any competition from small independent companies.

I say if you've got a circuit idea that you're proud of, go for it. In the larger scheme of things, being able to say "Oh, that? I patented it a few years ago" will always carry its own value (and not just on the internet). People who are bold and original enough to even think about patenting something deserve support, whether or not a prototype ever makes it to a sweatshop in Malaysia. 

[puretube]

The only function of patents these days is to enable big corporations to destroy any competition from small independent companies.

depends on how small you think... 

[mac]

Sorry, but I asked about patenting before licensing because:
1) Law may/may not require a patent before licensing. I do not know laws in usa... nor in my country... Just curoiusity, I do not plan to make a lving selling pedals, just a hobyyist.
2) When making business I do not trust my own shadow. Why? Suppose that you contact XYZ pedal manufacturer. You meet them, you show a demo, you SHOW the schematic and ask some amount of money for your invention. You shake hands and they tell you "Ok, we are going to think about this. We'll be in touch". Then you sit by the phone for days waiting the call... Months later while browsing an online store you find the new XYZ pedal, with your circuit inside. That's a possible scenario. And not too unlikely.
Everyday I'm dealing with all kind of people that we'll cheat me even for $1... I build houses... When I started in this business my partner and I showed the project of a new house (ie the blue print or schematic) to a potential well-reputed, respectable, friend-of-a-friend and bla bla bla customer. He memorized the blue print and contrated someone else to build our design.
I learnt a valuable lesson: do you want to see my design?... pay!!! If I move my finger only one inch I want money back for my micro-Jules and nano-seconds, and I do not care who you are or who sent you.

The only function of patents these days is to enable big corporations to destroy any competition from small independent companies.
---------------
depends on how small you think... 

Patents are to protect you from small and big companies. And to protect small and big companies from you. 
A patent is like the title of your house or car, the whole economy relies on them.

Licensing means you would get money just because they use your design. If your investment is only a drawing, then you will have a hard time earning back new pencils.

'
NO, I do not agree. It does not matter if you spent one hour or years to invent something, if it sounds terrific or crappy, or if there are thousands of distortion boxes out there. If your are smart, a good vendor and lucky, you may get some $$$. If some manufacturer is going to sell your design, do the maths. Try to estimate (not an easy task, google on how to) how many can they sell in a year? If you think they can sell a fair amount then ask for a fair price. There are no rules about the money you get vs. your investment. Push the entropy to your side.

If you are planning to make a living or just get some extra cash designing and selling your ideas, then there is always a way. I think that if you spent a lot of time messing with your breadboard, why not to profit with it? With guts and a sharp eye everything is possible.

BTW, RG, MH, well said.

mac

[zjokka]

if you cannot build a lot, just multiply the price by three or so, you'll get famous ever so fast.
But seriously, build 10 or so and give a few to local guitarist to try. The ones that really like 'm, let them have one for free as your endorsers. They might spread the word.

Licensing means you would get money just because they use your design. If your investment is only a drawing, then you will have a hard time earning back new pencils.

'
NO, I do not agree. It does not matter if you spent one hour or years to invent something, if it sounds terrific or crappy, or if there are thousands of distortion boxes out there. If your are smart, a good vendor and lucky, you may get some $$$.

if you're going to make money off a stompbox (not talking about other inventions) it will have to have the complexity and specificity of puretube's boxes, or something. nobody is going to give you any real money for another fuzz face design.

Isn't the licensing fee sort of a courtesy gesture?

Another thing: if you put a patent on something you will have to publish your designs. So it's quite the opposite of "making sure nobody knows how it works" it's only purpose is to prevent all other people from commercializing it.

[slacker]

Isn't the licensing fee sort of a courtesy gesture?

No it's not a courtesy gesture, for one thing it often means that only the company that licences the designs can produce them. That's why Andy took down his schematics when he got the deal with tonefactor. Admittedly they could just have ripped off his ideas, which is what you seem to be suggesting, but luckily there's still some good guys out there. 

Another thing: if you put a patent on something you will have to publish your designs. So it's quite the opposite of "making sure nobody knows how it works" it's only purpose is to prevent all other people from commercializing it.

There's not really much point talking about patents in relation to stompboxes as most things are based on fairly simple ideas, other designs or even manufacturers application notes, there very little that you could patent.

[brett]

Wow. 
Thanks heaps for all of the usefull advice.  There were a number of options that I hadn't considered.

Goop costs $50 a bucket but patents cost $15k, so I'll try to keep the circuit a secret for a while.  (I already have a patent, and so I'm familiar with that painful process).  I did my costings yesterday, and they'll cost me just over $100 (US$80) each, so retail would be about $200 (US$160) if I sold through shops.  Looks like direct sales through magazines and ebay might be the best way to go, at about $140 (ie $40 to cover advertising, returns, overheads).  Also, the son of a fellow at work is the guitarist in Oz band Powderfinger, so I'll give him one.

Thanks again for the advice.   

[MartyMart]

I wish you the best of luck with your venture Brett, anyone willing to go commercial and make
a go of there own design, deserves heaps of praise and respect IMO 

I remember Zvex posting about this, he started up after ditching his studio and was driving around with
a handful of cool pedals to show to all the local dealers - tough work, but it came good for him so why
not you too  !!
Get the marketing and the numbers right - coupled with a cool looking ( and sounding ) box - BINGO !
90% of guitarists say "that looks cool" BEFORE they say "that sounds cool"  !!

Cheers,
Marty.

[mattpocket]

90% of guitarists say "that looks cool" BEFORE they say "that sounds cool"  !!

I think we can all say we've spent hard earned cash on something really crappy for that exact reason! haha

[Paul Perry (Frostwave)]

The only function of patents these days is to enable big corporations to destroy any competition from small independent companies.

depends on how small you think... 

Well, I was just at an awards presentation dinner for people who had invented and/or developed new tecghnologies that had significantly boosted the Australian economy.
If I had ever had any of THEIR ideas, I would have seriously considered patenting it... (my friend's idea was to use an optic fiber so that a confocal scanning microscope could be physically separated from the laser generatign the light - personally, I don't think it was a patent that would stand up in court. But he got backing anyway.)
An interesting sidelight: all these guys took about TWENTY YEARS to get their stuff commercially successful. About as long as the life of the patent!

[wampcat1]

My advice is to start by selling it through any local outlets and making the pedal a "local legend".  Certainly one hurdle that skips is factoring in shipping costs to the pricepoint.  You'll also have a MUCH better idea of just exactly what your local comparables are and how to market it, plus enough customer contact to be able to incorporate user feedback.  Certainly there are places like pedalgeek, musictoyz, etc etc that concentrate on booteek pedals, but finding one distortion/overdrive amidst their stock is a bit like looking for a "cute girl" in a Google Earth photo of Beijing.

shortest post EVER from Mark Hammer. 
Just kiddin' ya Mark! 

bw

[wampcat1]

Licensing means you would get money just because they use your design. If your investment is only a drawing, then you will have a hard time earning back new pencils.

'
NO, I do not agree. It does not matter if you spent one hour or years to invent something, if it sounds terrific or crappy, or if there are thousands of distortion boxes out there. If your are smart, a good vendor and lucky, you may get some $$$. If some manufacturer is going to sell your design, do the maths. Try to estimate (not an easy task, google on how to) how many can they sell in a year? If you think they can sell a fair amount then ask for a fair price. There are no rules about the money you get vs. your investment. Push the entropy to your side.

If you are planning to make a living or just get some extra cash designing and selling your ideas, then there is always a way. I think that if you spent a lot of time messing with your breadboard, why not to profit with it? With guts and a sharp eye everything is possible.

BTW, RG, MH, well said.

mac

I'd have to disagree a bit, I'll explain why briefly...

Several years ago (2002/2003 or so) I started selling mod details on various pedals. At the time, not many people were doing that, if any at all besides the free websites. At the time I had the same line of thinking as you.

Fast forward several years later, I make a habit of purchasing other people's DIY mods, just to see how "close" they resemble to what I'm doing. I realize that for example, a tubescreamer mod is going to incorporate the same basic changes if you are just replacing components, but there are some mods that I did that were "happy accidents" to coin a phrase from Paul Weller. It's sorta funny to buy someone else's DIY mods and see my pics, the same exact mods, and the same exact "happy accidents" under a new name. I used to fight it, but the time it takes to do that compared with the profits gained or lost by doing so just isn't worth it in this little itsy bitsy tiny micro niche called DIY mods.

For example, how many times have you seen someone advertise on ebay a sd-1 mod or pedal that sounds just like a fulldrive? I've seen and purchased many. Funny thing about that mod when I wrote out the parts changes 4 years ago... the circuit is NOT the same as the fulldrive (which is a tubescreamer basically), but it sounded similar with low parts changes. I'm a realist though... I could fight it, take the guy to court, and maybe win or lose. I would have spent $1000's though, and the guy probably profited a couple hundred bucks over the course of a couple of years. I can take that same money and time fighting it, and just try to do something bigger and better. That has been more profitable.

I will say this though...in the grand scheme of things, selling "boo teek" pedals is the least profitable venture I'm involved with. Do it for fun, but don't do it to get rich, unless you want to outsource to China or Japan.



bw

[mac]

Boutique pedals are intended to a narrow slice of the market. Why selling only boutique boxes? Marty made a point. Most  of the guitarrist are young and unexperienced, and there are lots of them. I would point to them also. Two lines, one for the pro, one for the crowd. Most companies have a division intended for the wealthy people and another for the masses sometimes with a different name, or in the case of Marshall you have the mg series and the valve line. 

...Also, the son of a fellow at work is the guitarist in Oz band Powderfinger, so I'll give him one.

A guy I know in my country started his business this way. He contacted via a friend to a famous band here, and showed them his pedals. The guitarrist loved some of the boxes and in the next record they apperared in the aknowlegments. He is 20yrs. He is selling directly via music stores. he is doing well AFAIK.

Good luck.

mac