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Passive income for software developers: Case study of earning 200,000$

Most software developers feel like they work day and night, they need some freedom to live their lives. For that reason over time programmers start to search passive income for software developers. I felt the same when I was working as a software developer. You get a salary every month but you have to put in the same effort every month in order to get paid.

Writing code is very intensive brain work, it is not like being an accountant and using your software periodically and increasing your salary as the 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 the project is finished.

passive income for software developers

So every software developer after a while starts thinking about starting their own software company or small business that can grow or keep earning steady passive income every month for future 5-10 years. Having a product and improving it is much easier 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 for a programmer is marketing the product and making it sell to many customers that will use it. That is what Rob Walling 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 challenges before acquiring a new customer. Thought that it would bring more customers. Didn’t have any difference from the main competitors. Failed with this project.
  • Learned that it is very hard to compete with big names in a big market. Instead small markets can bring a couple thousand per month and are much easier to target customers.
  • Worked after a day job at home for 8 hours 6 weeks to build the next project that submits blog posts to search engines. Was successful at targeting niche markets and earned 200$ passive income per month from it.
  • Knowing how to market products today he would market products before starting to code it. Getting 100-200 emails and notify them when the program is ready to buy. Also research the market using google keyword tools before starting to build a project.
  • Decided to buy a forum software sold for 150$ on eBay. Had a difficult time acquiring customers. Advertised on AdWords for 1500$ but had only one customer who bought for 99$.
  • Sold forum script for a couple thousand while it was bringing 300$ 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$, got advice from the market about that software was undervalued. Did some SEO for the site.
    • Next month he sold 3 copies again and earned 900$. 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 the main keyword. Started earning a 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 assistants 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 stuff required to succeed as a small entrepreneur.
  • In 2009 built micropreneur.com course for micropreneurs. Targeted at people like himself who worked at day jobs 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 a MicroConf conference.
  • Passive income strategy for software developer Rob was:
    • Acquire a software product.
    • Improve it by adding new features, fixing bugs and marketing.
    • Delegate: Assign an employee to manage it.
    • Worked on 1-2 projects 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. After a couple years of development and marketing passed 200.000 $ per year profit. Then sold to buy the next bigger software project with growth potential.

Reading these notes from an interview of a software developer earning decent income from programming requires marketing skills as well. Same process repeated several times for different software projects. All of them are business oriented projects answering needs for particular users and companies. With each project passive income grew steadily then sold to get bigger projects.

How to find ideas for passive income projects?

As a software developer or engineer you are already working on client projects. With every project there are some existing software solutions. Sometimes those solutions are not exactly what the client wants and you as developer have to create additional functionality as a plugin, code customization or write new software solutions 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 the most requested solution and there is no existing  solution in the way that is requested. Then this solution can be offered as a software product which can be marketed and sold to many clients.

How to find ideas for passive income projects for software developers?

Solve your own problem

When you run a business or work on your own projects you use various software solutions for making management process easy. In some cases you may not find existing solution to fix your operational requirement. Other software solutions may be difficult to use or have some limitations. To solve this problem you start building your own solution.

When you have a problem running your business then same problem may occur for other people running similar business process as yours. Solving your own problem may be a solution for many other users.

Replicon time tracking software idea is also started as solution to their own problem. Two software developers built it to track their time spent on client projects. Then they started selling it as SaaS (software as a service) which can be considered as a passive income when executed correctly.

Solve your customer’s problems

We can sell any software solution that fixes common problems. It can be your own problem or problem of your clients. When client asks for custom software this means that they have not found right solution to their problem. Solving their problem will be solution for many other clients.

Read story of theme business that started as solution for a client. Themes are great solution for earning passive income as a developer.

Search for common problems on forums, Q&A sites, social media

Finding unfixed problems and offering a solution is common pattern for earning money. You can find unfixed problems using websites where users share their opinion. These are forums, questions and answer websites like Quora or social media websites like twitter and LinkedIn.

For example WPbeginner website were getting tutorial ideas from twitter posts searching for relevant hashtags. Tutorials are great for earning money as a passive income.

Learn by analyzing forum threads

You can find ideas in related forums and communities. Users always ask questions related  to problems they came across using various software.

Sitepoint forum is a great example for this:

  • When questions were asked related to various software usage — they created web tutorials to answer them.
  • When tutorials were printed from website — they converted them to books and sold 20.000 books.
  • When users started posting websites for sale in forum threads — they created Flippa website to sell websites.
  • When designs were requested and offered in forum threads — they created 99designs to sell logo, website, brochure designs.

As you can see forum is an other fountain for monetizable passive income ideas.

What are key metrics that define passive income software projects?

  • Projects should be oriented for businesses or websites that generate direct or indirect revenue. For example, a 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 than 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 a long time existing problems 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 customers.
  • Documentation with written and video tutorials should be created for reducing future support requests to minimum.
  • Most important metric is generating decent profit without taking much of your time.

7 sources of passive income for programmers

  1. Software development, marketing and sales. This strategy was explained in current case study that you are reading.
  2. Blog about programming or developing software. You can document your progress, explain challenges and solutions. Monetize blogs with affiliate products, eBooks, courses, contextual ads. Check case study for Wpbeginner earning 100k $ per year.
  3. Teach programming online as a course or membership website with articles, podcasts and videos.
  4. Build mobile apps, monetize with ads and paid pro versions.
  5. Build and sell themes for popular CMS like WordPress, Shopify, Opencart, Joomla etc. Offer free and paid versions. Check these case studies for successful theme businesses:
  6. Build and sell plugins for popular content management systems. Check Webkul plugins earning 1 million $ per year.
  7. Offer installation and optimizations services for popular CMS.

FAQs

Can you make a lot of money as a programmer?

Earning more money as a programmer can be done by developing and marketing your software. Build flexible software to sell many times instead of building for one customer. Select a niche with high demand. Listen to user feedback and improve your product. Delegate some heavy work and move towards making more passive income.

What can programmers sell?

Programmers sell software products that they built. Additionally they sell complementing related services, education materials, online or in person courses, optimization, migration, installation and upgrade services. Main point here is to increase income streams that will bring passive income.

What is the most profitable passive income?

Most profitable passive income is affiliate marketing. Because you are responsible for promoting the product. Developing, delivering, customer support is provided by the product owner. If you have your own product then you should add related complementing affiliate products to it. It can be integrated with related services that have affiliate options.

For example if you have developed web software then promote completing affiliate services like: web hosting, email marketing, SEO research, education, themes and plugins.

What is the best way to promote software products?

Best way to promote your software is to give initiative for promoting your product with affiliate marketing. This way you will have an army of marketers promoting your product. Depending on conversion rate, earnings and quality of your product people promoting your software will increase.

Final thoughts on passive income for software developers

To generate passive income as a software developer, build or buy already established software products. Initially do not spend more than 2 month when creating a new software project yourself. If buying established software projects 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, and make the user interface intuitive.

Market your software with video tutorials and demos, create in-depth content with tutorials and how to guide. Write detailed documentation, add affiliate channels 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 purchase bigger passive income projects.

Ideally a software project which generates passive income has maximum one major update per year and sales consistency relies 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. Additionally sell your own or affiliated products and services complementing your software like: web hosting, SEO tools, themes, plugins, web courses and books.

At the end of the journey software developers will spend little time developing a project while earning passive income from it.

 

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