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profit is Nita dirty word so get over , you're going to be an inventor you are , going to face the fact that profit is , one of the important parts if not the , most important part of being an inventor , I know Icon I set a dirty word prophet , everybody thinks that's a bad thing but , let me get into the details and explain , it to you a little bit better why profit , is so explore at important making a , profit separates the professional from , the makers and the other amateurs out , there it basically separates the , children from the grown-ups profit is an , important part of being in business so , let's talk about money for a moment , let's say you have an idea and it's a , really good idea let's give you the , benefit of doubt and say it's something , that could sell and could make money , well the fact is is you're going to need , investors you're either going to ha veto , invest in yourself you're going to have , to go to friends and family a bank maybe , angel investors it depend son how big , your idea is and what you're willing to , do to see that idea through well there's , only one thing that investors are going , to want to hear and that's what's in it , for them and there's only one thing , they're really interested in and that's , a profit if you're going to take money , from people they're going to want to , know that they're going to be paid back , and that you're going to get something , in return for their investment and the , risk that they'retaking in you so make , sure when you talk to your in potential , investors even if it's your family that , you're always talking about your , business plan and your profit motive for , your invention idea this is really , important it'snot a bad thin git's not , a dirty word it's a reality of life and , it's a reality of being a professional , inventor many are going to say o prophet , is greedy it's a bad word Id on't , believe in it it's about community it's , about all these other things blah blah , blah it's not about any of that let me , tell you Little more about the maker , community and what happens as things , progress with your invention and idea , I'Webern doing this for years and it's , time that you start thinking about how , to really raise money and sell your idea , to the world telling people that you , have a community of friends that are , willing to buy your product telling them , how you're going to change the world or , make it a better place is not going to , convince investors to give you money , what they want to know is what's in it , for this let's see how far you can get , when you try to raise funds from from a , bank or from an investor by all these , sharing just happy thoughts we need to , start talking about profitable , business model how are you going to make , a profit and don't even think the profit , means how much money you're going to put , in your pocket when talk about profit , I'm talking about how much product , cost to build how much it cost to , manufacture how much the cost to ship , the infrastructure of the employees and , all those things that are added to the , cost of making a product and in for what , you sell the product for on the open , market that profit itself is the first , step in profit then maybe someday we can , beg into talk about the profit that you , make as the inventor that's a long road , ahead , unless you have the amazing ability to , convince others to just give you money , for the rest of us we have to start , thinking about profit and how we are , going to turn this into real business , model I know you guys are thinking right , about now that I am wrong and it places , like Kick starter in a crowdfunding , community have changed things it's not , true the crowdfunding community is just , like any other business or customer and , let me explain to you why it's all about , the money it's about the money for , kick starter and a fees add a charge it's , about the community of backers and the , fact that they're putting up their , hard-earned money to support you once , they give you money they expect , something in return so you better have a , profit model built into your invention , or your pledges or whatever else you're , offering on Indigo Kick starter or , other crowdfunding sites because if you , do not you are going to wind up taking , money from these people and you won'tube , able to fulfill your wards so again it's , important to start thinking about profit , it's Nita dirty word oh ye sit is is , you're going to say it's a dirty word , let me kn owlet me explain it to you , another way what who's the bad person in , scenario where a guy invents a product , and adds profit model to it let's say it , costs him a hundred dollars to make his , reward he then goes in cells afire W , on Kick starter and gets a few hundred , backers he figured out the real cost was , a hundred dollars he factored in all his , overhead is shipping cause packaging all , the other things that come come with , inventing an eye product he factored , that in and he'smacking a profit of two , and a half times on hundred dollar , cost then we have another guy who , creates you know accosted campaign , or an Indigo campaign and he sells , his product for one hundred dollars the , very one hundred dollars it cost him to , build it now he's faced with the fact , that he's blown through all his money , and he can't afford to ship the reward , who is the dishonest person who is the , greedy person in this case the guy who , actually lived up to his promises or the , guy who did'make a profit and did't , fulfill the backer rewards and took all , that money from people again this is why , I say profit is an important part of , being an inventor profit is Nita dirty , word so get over it going back to this , idea that every investor wants to know , what's in it for them it'snot about the , community it's not about what makes , people feel good yes they want to know , what positive things that the product is , going to do how it's going to change the , world all that stuff is good for the , image of the product bu tin the end , investors are selfish and so are most , crowdfunding sub backers they all want , to know what they are getting for , putting up their money if an investor he , wants to get at least his money back but , more importantly he wants to see a , return for his investment backers yes , they enjoy being part of you know , watching you grow and create a new , product or business but in the end they , do want a product for the money they , give you they don'twat to hear feel , good ideas they don'twat to hear that , you could't fulfill the rewards trust , me they will get angry they will turn on , you if you don't fulfill those rewards , so you need to make sure that you live , up to your promises both to your , investors the people in the community , your family and friends or whoever else , even yourself if you're putting your own , money in you want to make sure that you , get your investment back there's nothing , wrong with that there's nothing wrong , with seeking a profit so as an inventor , what do we price our products at how do , we calculate those costs what I normally , do is very simple I calculate how much , it costs to build an individual product , and then figure out what the cost is to , build a hundred it's a good way to start , so take a hundred pieces calculate all , the costs involved to turn those hundred , pieces into a reality don't forget to , include , shipping packaging and all the other , costs that may be associated with it , including infrastructure buildings , employees whatever you need I then , usually multiply that number by two and , a half times and I know some people are , my gosh two and a halftimes trust me if , this is the first time you are inventing , you will find that two and half times , is the actual cost to turn your , invention into a reality it is not , greedy it is not over calculating you , will barely make any money and if more , than likely you were going to have to , put still put some of your own money , into the product most of the products I , have invented have cost me money to get , off the ground even the ones that have , been successfully funded on Kick starter , but the life after the Kick starter , project is what's important to me it's , what led me to this show and teaching , you guys how you can turn your , inventions into reality it's because I , have learned all these things along the , way it dozen't change'vie talked to , plenty of people on Kick starter and , Indigo and'vie heard the same , stories over and over again in fact i'll , tell you a little story a few years ago , right in the beginning overstate , there is a group of college students , that invented a lamp it was a , beautifully design they we redesigned , students from one of the colleges here , inclining it was a beautifully , designed lamp who's all made of metal , sat on your desk very pretty they sold , Ito don't remember the exact prices but , i want to say was a few hundred dollars , because it was metal and it was , expensive to begin with and was , talking tithe three founders of this , kick starter project and they explained , tome that they made a huge mistake when , they set up the rewards for this lamp , they forgot to anticipate the weight , that the unit cost to ship and they , did't calculate that into their price , and if i remember correctly they told me , that they each of the three people we're , going to have to put about ten thousand , dollars of their own money college , students to make sure that they could , finish the shipping of all these lamps , that they had created now i felt bad for , them for doing this but this is a simple , lesson to learn that these are the , important steps , recalculated three four or five times , until you're sure that that number is , correct go over the number look at , different scenarios come up with a , number that you're comfortable with that , you know will cover all the costs , involved to ship those rewards it's the , most important part of being an inventor , and again I'vie said in a million times , in this episode Otis important to have , a profit model built into each and every , one of your inventions if you liked this , episode and learn something I hope you , will subscribe to our invention therapy
