A typical software business worldwide that's still open after three years brings in $8.2k a month ($98.2k a year) and keeps about $21 of every $100. That leaves about $20.6k a year.
The top 10% make more than $43.3k a month. The bottom 10% make under $1.5k.
Thinking of starting a software business?
- Typical cost to start
- $4.5k
- Still open after 3 years
- 52%
Monthly revenue by year
Estimate · For businesses still trading at each point.
| Year | Bottom 25% | Typical | Top 25% | Top 10% |
|---|---|---|---|---|
| Year 1 | $1,300 | $3,400 | $9,100 | $22,000 |
| Year 3 | $3,400 | $8,200 | $19,700 | $43,300 |
| Year 5 | $4,300 | $10,600 | $26,400 | $60,000 |
Year 3 monthly revenue
How much does it cost to start?
Typical cost to start: $4,500.
| Item | Typical cost |
|---|---|
| Building the first version | $2,500 |
| Design & website | $700 |
| Hosting & tools, first year | $600 |
| Terms & privacy policy | $500 |
| Working capital | $300 |
Where the money goes
Estimate · Share of revenue for a typical business in year three.
How many survive?
Estimate · 52% are still trading after three years, and 44% after five. These are the reasons owners gave for closing:
What the successful ones do
- Charged from the first customer, with no free plan
- Sold yearly plans paid up front
- Picked one kind of customer and built only for them
Verified software businesses on HumDays
Rotaboard
“We charged from the first customer. Paying customers tell you what really matters.”
Questions people ask
Is a software business profitable?
Estimate · Usually, if it survives. A typical software business worldwide keeps about $21 of every $100 in sales by year three, which on typical sales leaves about $20.6k a year. 48% close within three years.
How much does it cost to start a software business?
Estimate · The typical cost to start is $4.5k. The biggest items are building the first version and design & website.
How long until a software business makes a profit?
Estimate · A typical business had its first profitable month after 14 months. Side-hustle starts took about two months longer.
Why do software businesses fail?
Estimate · The most common reason owners give is “not enough paying customers” (34% of closures), followed by “customers cancelled faster than new ones came” (22%).
Is a software business seasonal?
Estimate · Sign-ups peak in January and September. Survivors plan cash around the quiet months.
Ask software subscription owners
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