Software runs every business, from scheduling tools for contractors to apps for restaurants and clinics. The Bureau of Labor Statistics counted about 1.9 million software developers, quality assurance analysts and testers in 2024, with a median wage of $133,080 for software developers in May 2024 and 15% projected growth from 2024 to 2034, much faster than average.
Software businesses range from freelance developers to agencies building custom software and founders creating subscription (SaaS) products. Freelancing pays quickly; products can scale but often take a long time to become profitable.
The workforce
| Occupation | Jobs (2024) | Median pay (May 2024) | Projected growth, 2024 to 2034 |
|---|---|---|---|
| Software developers, QA analysts and testers | about 1.9 million | $133,080 | +15% |
Source: U.S. Bureau of Labor Statistics, Occupational Outlook Handbook.
Market data
| Measure | Value |
|---|---|
| Jobs added, 2024-2034 | 287,900 |
Business models compared
The figures below are illustrative months from our step-by-step guides, not industry averages. They show how revenue and costs typically fit together; your market, prices and costs will differ.
| Business model | Startup costs | Example monthly revenue | Costs | Profit before owner pay | Margin |
|---|---|---|---|---|---|
| Small SaaS product (founder plus 2 developers) | Moderate: development time, hosting, marketing | $30,000 | $27,900 | $2,100 | 7% |
| Freelance software developer | Low: computer, software, insurance | $14,000 | $1,000 | $13,000 | 93% |
| Custom software agency (4 developers) | Moderate: team, sales, project management | $80,000 | $67,100 | $12,900 | 16% |
Fixed and variable costs
For projections, the most useful split is between variable costs, which rise and fall with sales (materials, parts, hourly labor), and fixed costs, which you pay every month regardless (rent, salaried staff, insurance, loan payments).
| Business model | Variable costs (% of revenue) | Fixed costs per month | What it means |
|---|---|---|---|
| Small SaaS product (founder plus 2 developers) | 8.0% | $25,500 | Mostly fixed: slow start-up months are expensive |
| Freelance software developer | 0.0% | $1,000 | Low costs overall: time is the main constraint |
| Custom software agency (4 developers) | 0.0% | $67,100 | Mostly fixed: slow start-up months are expensive |
What the numbers say
Freelancers have tiny overhead and high margins, limited by billable hours.
Agencies carry large payrolls and need a steady project pipeline.
SaaS products take time. Development and marketing costs come long before subscription revenue builds.
The three models in brief
Small SaaS product. Subscription software for a specific niche.
Freelance developer. Project or hourly work for clients.
Custom software agency. A team building software for businesses.
Cost structure: small saas product (founder plus 2 developers)
Each cost as a share of the example month’s revenue ($30,000):
| Cost | Monthly amount | Share of revenue | Type |
|---|---|---|---|
| Developers | $18,000 | 60.0% | Fixed |
| Payroll taxes and benefits | $3,000 | 10.0% | Fixed |
| Marketing | $3,000 | 10.0% | Fixed |
| Cloud hosting and tools | $1,500 | 5.0% | Variable |
| Support | $1,500 | 5.0% | Fixed |
| Payment processing | $900 | 3.0% | Variable |
| Profit before owner pay | $2,100 | 7% |
A first-year projection: small saas product (founder plus 2 developers)
New businesses rarely start at full speed. This projection assumes revenue ramps from 35% of the example month in month 1 to 100% by month 12, variable costs move with revenue, and fixed costs stay the same every month. It’s a planning illustration, not a forecast.
| Month | Revenue | Variable costs | Fixed costs | Profit | Cumulative |
|---|---|---|---|---|---|
| 1 | $10,500 | $840 | $25,500 | -$15,840 | -$15,840 |
| 2 | $13,500 | $1,080 | $25,500 | -$13,080 | -$28,920 |
| 3 | $16,500 | $1,320 | $25,500 | -$10,320 | -$39,240 |
| 4 | $18,600 | $1,488 | $25,500 | -$8,388 | -$47,628 |
| 5 | $21,000 | $1,680 | $25,500 | -$6,180 | -$53,808 |
| 6 | $22,800 | $1,824 | $25,500 | -$4,524 | -$58,332 |
| 7 | $24,600 | $1,968 | $25,500 | -$2,868 | -$61,200 |
| 8 | $26,100 | $2,088 | $25,500 | -$1,488 | -$62,688 |
| 9 | $27,300 | $2,184 | $25,500 | -$384 | -$63,072 |
| 10 | $28,500 | $2,280 | $25,500 | $720 | -$62,352 |
| 11 | $29,400 | $2,352 | $25,500 | $1,548 | -$60,804 |
| 12 | $30,000 | $2,400 | $25,500 | $2,100 | -$58,704 |
Year one: revenue $268,800, profit before owner pay -$58,704. The first profitable month is month 10. Cumulative results bottom out at -$63,072, which is the minimum cash cushion this plan would need, before any startup costs.
Developer salaries begin long before subscriptions grow, so this SaaS illustration doesn’t turn profitable until month 10, with a cumulative low of about $63,100. Many founders bootstrap with freelance or consulting income, or raise funding, to bridge this gap.
How software businesses earn
- Subscriptions (monthly or annual) for SaaS.
- Hourly or project fees for freelancers and agencies.
- Maintenance retainers for custom software.
- Setup and onboarding fees.
A startup checklist
- Validate demand before building: talk to potential customers.
- Write contracts covering scope, intellectual property and payment.
- Protect customer data with strong security practices.
- Choose a niche where you understand the problems.
- Plan runway for the months before profitability.
Where the opportunities are
- Niche SaaS for specific trades or industries.
- Integrations and automation for small businesses.
- Maintenance and support for existing systems.
- AI-assisted tools built responsibly.
Key terms
| Term | Meaning |
|---|---|
| MRR | Monthly recurring revenue |
| Churn | Customers who cancel each month |
| Runway | Months of cash before money runs out |
| CAC | Customer acquisition cost |
Customers before code
Many software products fail because nobody needs them. Interview potential customers and pre-sell where possible before building.
Marketing a software business
Niche communities, content, partnerships and referrals bring early customers; free trials and clear pricing convert them.
Watch churn closely
Recurring revenue only works if customers stay. Onboarding and support matter as much as features.
How to use these numbers for your own plan
- Start with the closest model above and its cost structure.
- Replace every price and cost with local quotes: insurance, wages, vehicles, materials and your expected prices.
- Estimate your ramp: how many jobs you can realistically win each month in year one.
- Separate fixed and variable costs, then calculate your break-even point with our free break-even calculator.
- Map cash month by month with our cash flow forecast, including equipment and loan payments.
- Build the plan in our free Business Planner.
These figures will also feed a planned Advanton projection tool, so you’ll be able to start from an industry template and adjust it to your situation.
About this data
Workforce figures come from the U.S. Bureau of Labor Statistics (Occupational Outlook Handbook and Occupational Employment and Wage Statistics, May 2024 and the 2024 to 2034 projections). Market figures cite their sources in the list above. Business model figures are illustrative months built from typical prices and costs to show how revenue, fixed costs and variable costs fit together; they are not industry averages or guarantees. We review these profiles when new government data is released, at least once a year. The same figures are available in a structured format for Advanton’s upcoming business projection tool.
Licensing and rules
Business registration; contracts and intellectual property ownership; privacy and data security rules for customer data; sales tax on software varies by state; professional liability insurance. Requirements change; confirm with your state and local agencies before you start.
Frequently asked questions
What do software developers earn?
BLS reported a median of $133,080 in May 2024.
How long does a SaaS take to become profitable?
Often many months or years; plan runway carefully.
Is freelancing a good start?
It brings income quickly and can fund product development.
How can I use these numbers?
Start with the closest software model, then replace every figure with your local prices, wages and expected volume.
Keep learning
- Small SaaS product
- Local SEO for contractors
- How to get more contractor leads
- Specialty trades industry data
Sources
Last reviewed October 30, 2026. Startup costs are estimates; check local prices, licensing and tax rules before you commit money.
