It Company

How Profitable Is An It Company? (Updated for 2024)

Pat Walls

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Updated: October 7th, 2024

How Profitable Is An It Company? (Updated for 2024)

So you want to start an IT company?

And the first question that came to your mind was, “well, are IT companies actually profitable?”

Especially considering:

You could start a IT company with as low as $150
Based on our data, IT companies generate an average of $6.5M per year

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a IT company.

Let’s dive in!

Is an IT company profitable?

Yes, an IT company is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $6.5M per year with an estimated gross margin of 70%, you could expect to recover your investment within 12 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your IT company.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your IT company is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is an IT company worth it?

If you’re wondering if a IT company is worth it, the answer is a big YES. With IT companies, you have the potential to earn $6.5M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a IT company to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful IT companies case studies.

Examples Of Profitable It Companies

Here are a few examples of profitable IT companies, and a few more details about them:

1. iContact ($50M/year)

Ryan Allis co-founded iContact by recognizing a pain point early on through his experiences with digital marketing. His journey began as a young entrepreneur who started various ventures, like a computer consulting business when he was 11 and a web marketing consultancy by 16. While handling web design jobs, he noticed how tedious and inefficient existing email marketing solutions were, especially as most were desktop-based and not user-friendly.

This revelation came to a head when he partnered with Aaron Houghton, whom he met through the Carolina Entrepreneurship Club at UNC. The duo discussed creating a web-based email marketing tool that would simplify email newsletter distribution for small businesses. They validated their idea by offering free services to local businesses, such as Jimmy John's Sandwich Shop, to demonstrate the tool's effectiveness. Learning from initial user feedback and adjusting their approach, they managed to generate recurring revenue and acquire paying customers.

One of their early challenges was managing their resources; they bootstrapped the company, working in frugal conditions without a salary for years. Additionally, an instance of a critical server crash taught them the importance of system reliability and customer trust. Surviving these hurdles with persistent efforts and smart pivoting, they refined their product, proving the business model was not only feasible but scalable. By focusing on getting things right with the product and maintaining a close relationship with initial customers, they learned the importance of real-world validation and adaptability in their startup journey.

Is it profitable? Yes
How much money it makes: $50M/year
How much did it cost to start: $5K

How Ryan Allis Dropped Out of College and Built iContact to a $169 Million Exit

Discover how Ryan Allis turned a $4,000 server investment into a $169 million acquisition by Vocus, overcoming technical and financial challenges through strategic pivots in email marketing for small businesses.

Read this case study

Read by 82 founders

2. Twelvedevs ($1.2M/year)

Andrey and his co-founder Alexander were working as programmers in a software development outsourcing company when they decided to start their own company. Inspired by stories of small teams achieving success, they came up with the idea of creating a small team of 12 top developers. However, they soon realized that they needed to expand their teams to grow the company, leading to the formation of Twelvedevs, an IT consulting and custom software development company. Since its launch in 2012, Twelvedevs has completed over 70 projects in various industries, including Fintech and logistics, and has become one of the leading custom software development companies with over $100k in revenue per month.

Is it profitable? Yes
How much money it makes: $1.2M/year
How much did it cost to start: $300

These Two Friends Met In College And Started A Custom Software Development Company [$1.2M/Year]

Twelvedevs, an IT consulting and custom software development company, shares its success story after 9 years of completing more than 70 projects across various industries, having over $100k revenue per month, fifty employees, and a soon-to-be-opened branch in the U.S. for Fintech and logistics.

Read this case study

Read by 2,795 founders

3. iDigitize ($168K/year)

iDigitize leverages low-code/no-code technologies to help companies overcome their fear of investment by providing cost-effective and efficient services. Mumtaz Kazi, the founder, saw the potential of Microsoft Power Platform during his time in the healthcare sector and decided to spread the word and create a business that offers process automation, training, and analytics services. Through word of mouth and utilizing LinkedIn, iDigitize has attracted and retained customers, and their future plans include becoming a Microsoft Gold Partner and launching a product on the Microsoft Marketplace.

Is it profitable? Yes
How much money it makes: $168K/year
How much did it cost to start: $1.4K

How I Started A $14K/Month Processes Automation Business

iDigitize founder Mumtaz Kazi shares how she started an online business providing process automation, training, and analytics services, becoming a Microsoft Partner and academic partner of prestigious universities in less than a year, and plans for the future including launching a product on Microsoft Marketplace.

Read this case study

Read by 2,901 founders

Learn more about starting an IT company:

Where to start?

-> How much does it cost to start an IT company?
-> Pros and cons of an IT company

Need inspiration?

-> Other IT company success stories
-> Marketing ideas for an IT company
-> It company slogans
-> It company names

Other resources

-> It company tips

How much can you make with an IT company?

With a IT company, you can make an average of $6.5M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $150. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 12 months.

How much does a IT company make a week?

Based on our data, average weekly revenue for a IT company ranges around $135K. As such, you could see monthly revenues of $542K.

To know if your IT company achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your IT company.

How much do IT companies owners make?

The income of an IT company owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established IT company is about $135K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as an IT company owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

It Company Profit Margins

Generally speaking, an IT company can expect profit margin of around 70%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of an IT company, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, IT company owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, IT company owners can ensure long-term sustainability and profitability for their business.

It company owner salary

The salary of an IT company owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established IT company, in a prime position, might see an average weekly salary around the ballpark of $94.8K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a IT company may be a promising business to start - but the success of your IT company mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable IT company.

Part of

Starting An It Company: Everything You Need To Know

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