What’s an idea worth?

It’s difficult to determine the value of an idea; keep that in mind the next time you get one. There’s at least three kinds of value going into an idea.

  1. Value to the person who has the idea
  2. Value to the person who makes the idea into a product
  3. Value to the customer who’d buy the product; the idea manifest

I have reviewed a new product useful for designers and others to figure fabric costs on the fly. It’s a software application you can download to your iPhone; tentatively cost is $15. I love it and I think it’s great. The problem is, FTC regulations require me to disclose my relationship with the vendor and while I always have, it is difficult to do so in this case. Hence this separate entry and in which I explain the value of an idea.

The key problem in this case? The product was my idea so one could readily imagine I have a dog in this fight. But let’s be real; these are the conditions that govern whether I (or you for your idea) could possibly stand to gain from a positive review of the product:

  1. It was just my idea, I didn’t do any of the work.
  2. I didn’t pay to have the work done. The developer did it all.
  3. The product will be limited in appeal; it’s something only a few people will buy. Only people in the industry who own iPhones. A tiny group over all.

Missing from this list is the difficulty in measuring the potential losses (risk). The person who takes the greatest risks is entitled to the greatest gains. That’s what capitalism is all about. So let’s filter the list according to risk:

  1. If it flops, it doesn’t cost me a dime. I lose nothing, not even face. Okay, maybe some credibility with the developer who I convinced to consider the project. Considering I have zero investment in the product, I’m entitled to zero gains.
  2. The developer is risking the loss of his time and infrastructure (software etc) if it flops. Not only will he have lost the time he invested in the project, he cannot reclaim that time to put into another product that might have performed better (aka, opportunity costs).

In sum, if you have an idea, it’s not worth diddly unless you are risking something quantifiable. Face or credibility is not. All of this speaks to my explanation of stone soup entrepreneurs. The only way you have integrity is if you abstain from the expectation of gain if you’ve risked nothing.

Back to the practical; the developer and I never discussed (my) remuneration, it never came up. In some ways, it’s flattering that it didn’t since we both knew I wasn’t entitled to anything and didn’t even need to discuss it. As it happens, all I did was suggest the addition of a (broad) range of capabilities to a product he’d already created. Returning to the first three points in my list:
Ideas are not worth a dime a dozen. It’s execution that matters.

  1. If I’d paid to create the product, then I’d own it solely. I would also have to bear the costs of marketing, selling and delivering the product. No different than a clothing line.
  2. It is only after the first two conditions are met that I would earn the rights to any profits realized from my idea.
  3. Since I did squat, I get squat.

Off hand, this experiences gave me an idea with broader concepts. Maybe it’s already been done. It would be cool if I had the option of buying X number of licenses of the product (discount for volume?) and giving them away to valued customers and colleagues as gifts. Part and parcel of the arrangement would be a mention of my company on the bottom of the screen or in the information section of the utility. You know, an electronic version of those little pocket calenders you can buy to give away that have your firm’s name embossed on the cover.

In summary, I received nothing in compensation for my glowing review beyond a beta version called “product 4”. Although it has not been specifically agreed to, I will probably get a free version of the product in compensation for my idea (but not for the review). In any event, I will be delighted to pay for it because again, I think it is great and well worth the price. Even if it were not my idea. Hopefully you have figured out that I don’t recommend anything I haven’t bought and paid for myself.

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6 comments

  1. An iPhone developer gets 50 Promotional Codes per update that (s)he can use to give away the app to beta testers, friends etc. One could also use them in sweepstakes either on your own site or on weblogs like Fashion Incubator.

    The catch? Those codes are only redeemable in the US, which is a bummer if you live in Canada or elsewhere in the world.

    Here are examples of promo codes, albeit for a different app, that was also mentioned on the forum. They actually work, so if you have an iPhone or iPod touch, just enter them in the ‘Redeem’ box in iTunes… First come first served of course.

    R9YWWXRNM3E6
    9FHNJM4W76AR
    PY6AHRJRTJRX
    4XWEYTPTLHR4
    4ML7FA6XAM9E
    7HF7HAXAWMKH
    7HLT7Y6YENNH

  2. Ed says:

    Nice post. It’s a rich question, how to value ideas. Thanks.

    Could you give a pointer to the FTC requirements and your response-to/position-on them.

  3. Kathleen says:

    Could you give a pointer to the FTC requirements and your response-to/position-on them.

    The FTC reqs are here. Other than this (see comments), my position on them is, I don’t care. My policy from day one has been to disclose my relationship with any product vendor, long before it was required. The only change for me has been to gussy up my preamble of disclosure with a mention that the FTC regulations are being followed. Mostly because a lot of people still don’t know about them or if they do, they aren’t following them. The long and short of it is, I don’t take freebies. I pay for products and with the exception of one pair of scissors (once and it wasn’t favorable), will not review a product just because someone asks me to. Iow, I decide to buy something I need and then review it if I think it will interest my readers.

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