Most software developers feel like they work day and night, they need some freedom to live their lives. I felt the same when I was working as software developer. You get salary every month but you have to put same effort every month in order to get paid. And writing code is very intensive brain work, it is not like being and accountant and using your software periodically and increase your salary as company that you work for gets bigger. While you work hard on client projects some of them get very successful and make 1000 times more in terms of money while you don’t get any share of it after project is finished. So every software developer after a while start thinking to start their own software company or small business that can grow or keep earning steady passive income every month for future 20-30 years. Having a product and improving it is much easy than writing a new product for every new client every month. In this case study you will learn how to earn passive income for software developers.
Writing software is only one step of passive income. Biggest and hardest step is marketing the product and make it sell to many customers that will use it. That is what Rob Willing learned during his journey from day job working as developer and consultant to business owner having several profitable software and services.
Success story of software developer
Here are the notes from an interview made on mixergy.
- Had many failures before being successful.
- Build an ISP service and put challenge before acquiring a new customer. Thought that it will bring more customers. Didn’t have any difference than main competitors. Failed with this project.
- Learned that it is very hard to compete with big names in big market. Instead small markets can bring couple thousand per month and much easy to target customers.
- Worked after day job at home for 8 hours 6 weeks to build next project that submits blog posts to search engines. Was successful at targeting niche market and earned 200$ per month from it.
- Knowing how to market products today he would market product before starting to code it. Getting 100-200 emails and notify them when program is ready to buy. Also research market using google keyword tool before starting to build project.
- Decided to buy a forum software sold for 150$ on ebay. Had difficult time to acquire customers. Advertised on adwords for 1500$ but had only one customer who bought for 99$.
- Sold forum script for couple thousand while it was bringing 300$ per month.
- Was buying software instead of writing himself because he was billing for consulting 100$ per hour, 200,000$ per year. That is why it was cheaper to buy rather than code himself.
- Bought invoicing software for 11,000$. Believed that it was generating 900$ per month but learned that it was generating 300$ and had many bugs and unhappy customers. It was selling for 99$ per license.
- Fixed bugs and priced it at 300$, got advice from market about that software was undervalued. Did some SEO for the site.
- Next month sold 3 copied again and earned 900$. After it was constantly steadily earning 2000$ passive income each month. Also spent 1500$ on adwords for it.
- Applied for Y-combinator for funding but didn’t get it. Forgot to mention how he was successful at small projects selling software.
- Goal was to earn 7000$ per month in order to quit his day job.
- Bought justbeachtowels.com drop-ship business. It was on google 2nd page, after some SEO work ranked #5 in google for main keyword. Started earning couple thousand per month. Hired virtual assistant to take care of orders.
- Bought CMSthemer.com PSD slicing and converting to theme business. Outsourced slicing to offshore assistant and focused on SEO and management. Was making 3000$ per month.
- Advertised on buysellads and it was converting really well for design related businesses.
- Sold in 2008 Beachtowels.com for $7000, and cmsthemer.com for $12,000.
- Started writing a book startupbook.net, which has video and visual content to learn advertising and other staff required to success as a small entrepreneur.
- In 2009 built micropreneur.com course for micropreneurs. Targeted at people like himself who worked at day job and were not happy and didn’t have much free time to enjoy life.
- In 2009 acquired ApprenticeLinemanJobs.com, in 2010 acquired WeddingToolBox.com, and then in 2011 put together MicroConf conference.
- Acquire a product improve it and assign an employee to manage it. Worked on 1-2 project himself.
- Bought hittail.com traffic source analyzer and suggesting tool for targeting new keywords in order to grow organic search engine traffic for a website.
I recommend reading his detailed ebook to learn how he built his success in past years and transitioned from working for someone to owning multiple successful businesses. Ebook can be obtained from his blog www.softwarebyrob.com . From his website you can get some business ideas for software engineers to earn some passive income.
How to find idea for passive income project?
As a software developer or engineer you are already working on client projects. With every project there are some existing software solutions. Sometime those solutions are not exactly what client wants and you as developer have to create additional functionality as a plugin, code customization or write new software solution from scratch for that client.
When writing any code as an engineer we try to make it reusable as much as possible. At that moment if you feel that this solution or feature is most requested solution and there is no existing solution in the way that is requested. Then this solution can be offered as software product which can be marketed and sold.
What are key metrics that define passive income software project?
- Project should be oriented for businesses or websites that generate direct or indirect revenue. For example solution (theme, plugin) for eCommerce websites, time and personnel management services, service that can be integrated to other popular software with paying customers.
- Project should not need more that 1 update per year. Because if it requires regular updates it will not be much passive for a developer or you should hire a developer for it.
- Oriented for long time existing problem that will be used at least for a decade.
- Should have enough demand for covering expenses (development, marketing, support) including paying for your invested time.
- Recurring payment for reinvesting into project marketing and new features.
- Easy to install and use for non technical costumers.
- Documentation with written and video tutorials should be created for reducing future support request to minimum.
- Most important metric is generating decent profit without taking much of your time.
Final thoughts on passive income for software developers
To generate passive income as software developer, build or buy already established software product. Initially do not spend more than 2 month when creating new software project yourself. If buying established software project do not trust and rely on promised monthly sales figures, purchase only if you see room for improvement in marketing or in new features. Improve your software, fix bugs, add most requested features, make user interface intuitive.
Market your software with video tutorials and demos, create in depth content with tutorials and how to guides. Write detailed documentation, add affiliate channel to increase your sales. Do not work on more than 2 projects, delegate other projects to dedicated staff or sell. Hire assistants to create content, fix bugs, add new features. Reinvest earnings to hire assistants and purchasing bigger passive income projects.
Ideally software project which generates passive income has maximum one major update per year and sales consistency rely on content marketing and affiliates. Content marketing is usually 300 in depth articles covering all aspects of your software product updated once per year with relevant information. Sell other products and services completing your software like web hosting, SEO tools, themes, plugins, web courses and books.
At the end of the journey software developer will spend little time developing project while earning passive income from it.