Software development is a booming market today. All forward-looking businesses rush to launch their mobile apps, deliver subscription-based services, and expand their digital presence to reach out to users. So, if you’re looking for promising business ideas, launching a software development firm may be a good idea.
At first, you might think that such a business is hard to create. Here is a detailed guide to help you decide whether the game is worth the candle.
How to start a software development business?
According to Brights experts, starting a business without testing the waters makes no sense. It’s vital to check the market and verify the need for your services among the target customers. Once you see that the market is mature and has high growth potential, your business idea is validated. In this case, your investment doesn’t seem risky, as you know for sure there are enough users ready to consume your software.
Choose the way to sell your software
After the plan is ready, you need to develop a sales strategy. It often shapes the structure of your website, social media outreach, and marketing approach. So, you need to be perfectly clear about your plans and selling channels. Here are the options to consider:
- B2C sales (direct selling to individuals)
- B2B sales (direct selling of enterprise-level software to businesses)
- User downloads from the website and payment through ecommerce tools
In any of these cases, you need to maximize the customers’ buy-in by offering them free trials. This approach results in higher revenue, as people are more trustful when they test the software for some time and find it valuable and user-friendly.
What are the costs involved in opening a software development business?
The cost of your company’s setup can vary broadly, depending on its scale, size, and service range. The rule of thumb is to add the following aspects to the initial budget:
- Website hosting
- Development software, hardware, and equipment
- Fees for product patenting and copyright
- Employee salaries
Other things to include are office rental (if you plan an offline office), administrative costs, taxes, etc.
Ongoing Expenses of a Software Development Firm
Talking about the ongoing expenses, you should again consider the scale and ambition of your startup. As a rule, businesses need to allocate money on:
- Website maintenance
- Stock photos
- Subscription-based software
- Marketing and social media
Sources of Revenue
You can follow a range of sales strategies to succeed in the software development market. The most popular two options are:
- Subscription-based software payments (e.g., SaaS model)
- Payment per license
The per-license approach is better for clients because it gives them lifetime ownership rights with robust provider support. Still, a one-time payment may be too high for a startup on a budget. Thus, the SaaS model is emerging as a more flexible and profitable solution for software developers and customers. Users enjoy lower fees and the ability to test different providers to stop on the best option. Businesses build a loyal customer base and enjoy monthly/annual payments instead of a one-time payment for the license.
How much profit can a software development company make?
As soon as it comes to service pricing, the sky is the limit. However, we recommend remaining reasonable and realistic in price-setting. It’s easy to push customers away from your service if its real value doesn’t fit the price you charge.
To set a reasonable price, you need to research your market, analyze the features your competitors offer for similar products and make your own offer within the market range. If you want to charge more, make sure you add a couple of missing features that users really need.
Another criterion for determining the price for your software is the scale of software use and the target user. For example, a regular app for individuals with photo editing or music services can cost a couple of bucks, while a specialized enterprise-level subscription typically costs hundreds of dollars per month.
Creating a software development agency takes time and thorough planning. The good news is that you can make the process much simpler and more manageable if you have a step-by-step plan. So, think about every stage, set realistic timelines and goals, and move steadily through the process to bring your brainchild to life.