Software Development Business

How Profitable Is A Software Development Business? (Updated for 2024)

Pat Walls

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Updated: October 5th, 2024

How Profitable Is A Software Development Business? (Updated for 2024)

So you want to start a software development business?

And the first question that came to your mind was, “well, are software development businesses actually profitable?”

With a market size of $143B - there’s plenty of business to go around.

Especially considering:

You could start a software development business with as low as $100
Based on our data, software development businesses generate an average of $1.96M 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 software development business.

Let’s dive in!

Is a software development business profitable?

Yes, a software development business 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 $1.96M per year with an estimated gross margin of 90%, you could expect to recover your investment within 7 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your software development business.

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 software development business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a software development business worth it?

If you’re wondering if a software development business is worth it, the answer is a big YES. With software development businesses, you have the potential to earn $1.96M 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 $143B, 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 software development business 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 software development businesses case studies.

Examples Of Profitable Software Development Businesses

Here are a few examples of profitable software development businesses, and a few more details about them:

2. Balsamiq ($6.6M/year)

Balsamiq Wireframes, a low-fidelity wireframing tool, was founded by Giacomo "Peldi" Guilizzoni in 2008. The idea for the tool came from Peldi's experience working at Adobe, where he realized the need for a simple sketching tool that could be used by any contributor in product meetings. With a focus on constant learning and improvement, Balsamiq has grown into a team of 33 people with a monthly revenue of about $550,000.

Is it profitable? Yes
How much money it makes: $6.6M/year

How We Started A $550K/Month Wireframing Software Company

How Balsamiq became a $550k/month company through staying focused on simplicity and taking care of their team and community.

Read this case study

Read by 6,198 founders

3. 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 2,791 founders

Learn more about starting a software development business:

Where to start?

-> How much does it cost to start a software development business?
-> Pros and cons of a software development business

Need inspiration?

-> Other software development business success stories
-> Marketing ideas for a software development business
-> Software development business Instagram bios

Other resources

-> Software development business tips

How much can you make with a software development business?

With a software development business, you can make an average of $1.96M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $100. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 7 months.

How much does a software development business make a week?

Based on our data, average weekly revenue for a software development business ranges around $40.8K. As such, you could see monthly revenues of $163K.

To know if your software development business 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 software development business.

How much do software development businesses owners make?

The income of a software development business 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 software development business is about $40.8K. 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 a software development business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Software Development Business Profit Margins

Generally speaking, a software development business can expect profit margin of around 90%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a software development business, 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, software development business 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, software development business owners can ensure long-term sustainability and profitability for their business.

Software development business owner salary

The salary of a software development business 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 software development business, in a prime position, might see an average weekly salary around the ballpark of $36.7K.

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 software development business may be a promising business to start - but the success of your software development business mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable software development business.

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Starting A Software Development Business: Everything You Need To Know

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