I have been working on an aftermarket product for the sailing marine industry - it’s close to being ready for production, been working for some time with suppliers.
I have received a patent on this idea. There is a related patent which was disclosed in my patent. I believe there is enough chance of infringement that I need to license this other patent.
The quantities of this product are fairly low - I’ll be pretty excited about 500 per month. It is also the type of deal where whomever sells the product will want a 100% markup (i.e., they sell it for twice what they bought from me). The product will sell for about $250 USD.
I have started talking to the owner of the other patent and also tried to find info on the internet about licensing fees. The internet gave some % numbers.. but didn’t tell % of what - i.e., % of wholesale, % or retail?
I started off by offering a licensing fee of 5% of wholesale price - i.e., if the product sold retail for $200, this guy would get 5% of 100 (i.e., $5).
He came back with counter offer of 10% of retail - i.e., he would get $20.
I’m under the impression that he is way out of whack and would be the only one to make money on the business - which will eventually kill the whole thing.
So what is reasonable? Or??