Business Overview

Software is ubiquitous in today’s world, and many people and organizations can no longer function without the programs they rely on. These programs, of course, must be created, distributed and maintained. That’s the work of software development companies.

The software development industry is both big and strong. According to IBISWorld, the software publishing industry has an annual revenue of $238 billion and a growth rate of 3.9 percent per year. In total, the industry employs more than a half-million people.

Who is this business right for?

While many different types of people work within the software development industry, business founders tend to be people who bridge the gap between logic and creativity. Writing programs, of course, requires a strong command of logic. Having the vision for a software program that’ll be useful, however, requires creativity.

What happens during a typical day at a software development business?

Much of the work that goes on at a software development company is done on a computer. Business owners spend time writing code, testing and debugging programs, marketing their programs and providing support to customers.

What is the target market?

The target market for a software development company can be almost anyone, but it must be well-defined. Business owners need a clear understanding of a need that people or businesses have, and how a program addresses that specific need.

How does a software development business make money?

Software development companies have traditionally charged customers on a per-license basis, but many companies are transitioning to a software-as-a-service (SaaS) structure instead. In SaaS arrangements, customers pay an ongoing fee in order to use the developing company’s program. Some level of support is usually included in this fee.

A few outlying software development companies don’t charge license or subscription fees. Instead, these companies typically either build advertisements into their programs or offer training that does have a fee associated with it.

What is the growth potential for a software development business?

A software development company can be a small, one-person business, or it can grow into an international corporation. Gorges is a local development company in Ithaca, NY, and Logos is a good example of a niche-specific company. Microsoft and Apple are two of the largest software developers in the world, although their work isn’t limited to only making programs.