This week I had a question from a reader and it goes:
I spent 3 years developing a formula with an ingredient list that I love. Researched all the ingredients down to the last benefit of each ingredient.
I took it to a lab, they made samples, we went to market and three years later I wanted to switch labs only to find out out that they said they owned the formula and wanted ME to pay them 5K. I was shocked! The formula was all my idea and I assumed I owned the formula, please help!
This is such a common misconception and I am glad you asked the question.
And I am sorry that you spent all the time on the formula and found out the hard way who owns the formula. Technically, the lab owns the formula and you own the ideas.
When you present the idea to a lab and sign an NDA your ideas are yours and the concept are yours. However, the actual formula is the lab’s.
Let’s define what constitutes a formula. A formula is like a recipe and it has specific percentages of each ingredient. For example, a traditional cookie recipe is:
2 cups flour
1 cup water
1/4 tsp baking soda
1 cup sugar
all equals = 100 and makes good edible cookies.
A formula is no different.
When you provide a formula with all the percentages of the ingredients then YOU own the formula. When you provide an ingredient list to the lab and/or formulator whoever puts it together owns the formula. I hope that helps!
So what to do in your situation? How do you negotiate buying the formula?
There are several options:
1. Negotiate at the beginning in writing who own the formula negotiate a dollar amount, formula’s range anywhere from 2k-10K depending on complexity, time spent formulating and if it’s OTC or cosmetic.
If you can’t afford $$$ price then you negotiate per unit.
Per unit works like this – if I buy 10K, 50K x number of units from you then you the acme lab will release the formula to me, include all percentages.
What about the mixing instructions?
Mixing instructions are very important. Knowing when to add the water, the oil phases, etc. to a formula makes all the difference on the stability of the formula and the finished product. I am not a formulator but have been in the lab enough to see the difference heat, temperature and timing make in a finished product.
That said – I would negotiate both the formula and the mixing instructions.
What you don’t need is the equipment that they use, that’s optional with one exception. If you are taking your formula to a new lab they may not have the same equipment.
This time it would be important to own the mixing instruction would be if the new lab can’t get the formula to work, then you want to look at the type of equipment it was made in. If it’s a kitchen aid vs. a hand held blender, etc. Otherwise, I wouldn’t bother buying the mixing instructions.
While I’m wrapping this up, I wanted to give you an opportunity to get YOUR biggest questions regarding private labeling, creating a formula or finding a manufacturer answered.
Just leave a comment below and let me know what stumps you most, what you’re struggling with, or what you would most like help with when it comes to getting your projects done!
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