How To Make Money on Licensing Rights

Make Money on Licensing Rights

You can make a nice amount of passive income through licensing rights. There are two options. First, you can license your own ideas. Second, you can purchase licensing rights. In both instances, you can make money on licensing rights. Let’s explore all of this a little bit more.

What Are Licensing Rights?

Licensing rights are agreements that one party makes with another about how they can use and make money off of the first person’s ideas and/or products. Of course, there are many different ways to structure these agreements. For example,  royalties are a common type of licensing rights.

2 Ways to Make Money on Licensing Rights

Here are two different approaches if you want to make money on licensing rights:

1. License Your Own Ideas

Did you know that you can get paid just to have (well, to share) ideas? It’s a really cool opportunity, isn’t it? You come up with the idea. You sell it to an individual or company who actually does the hard work of selling the idea. And you receive a bit of money for your efforts. has a comprehensive article about this. They explain that different industries offer different earning potential for your ideas. For example, the author explains about selling ideas for holidays to novelty gift companies. The items only sold for a short period of time each year (such as around Valentine’s Day.) However, the author earned about $10,000 per idea, based on the royalties of all of the items sold.

You might come up with ideas for toys, kitchen gadgets, or any number of other things that big companies want to sell for you. If you’re great at coming up with fun ideas, but you don’t do well at making the actual items or marketing them, then this can be a smart route to take in order to make extra money.

2. Purchase Licensing Rights

Obviously, in the agreement above, you might be the person with the idea. You sell the idea to the vendor, they make and sell the product, and you receive a commission off of each sale. However, alternatively, you could be the vendor. UpCounsel explains that you can purchase and use licensing rights to make money.

Depending upon the agreement that you make with the seller, you can then copy and reproduce and sell the item that you’ve purchasing licensing rights to. You give them the agreed upon commission, then you keep the other profits. If you’re great at sales, then this can be a terrific option for making side income.

Tips to Make Money on Licensing Rights

A LinkedIn article says that you can become a millionaire over time when you choose to make money on licensing rights. They offer the following tips:

  • Come up with as many ideas as you can. Then contact as many companies as you can to offer your ideas.
  • Do the work, such as prepping some marketing materials, that easily shows companies why they will be able to sell your product.
  • Build relationships with those companies. Work for them regularly over time. Make yourself indispensable.
  • Ask for a small advance, then a higher amount of royalties.
  • Learn the ins and outs of patents and licensing agreements. The fine print matters.
  • Stick with it over time.

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