Back to basics -> revenue is a vanity metric

Sent by Jonathan Stark on January 13th, 2017

As software developers, we tend to discount our time.

And by “discount” I mean “forget about”

Let’s talk about revenue vs profit real quick...

Revenue — the amount of money you receive from your clients. 

Profit — your revenue minus your cost. 

Mkay, but what is the “cost” in this case? 

If you’re a typical lone-wolf software developer, your costs might seem insubstantial:

That’s about it, right?

Wrong. 

You forgot your biggest expense: YOUR TIME!

Think of it like this:

What if you continued to do all the biz dev, marketing, sales, admin, and project management, but PAID SOMEONE ELSE to do your dev work? 

Even if your developer was the most amazing ever, and there was no communication latency, and nothing was lost in translation, this developer would certainly be your biggest project expense.

In other words, YOUR DEV WOULD EAT ALMOST ALL OF YOUR PROFITS!

(sorry for all the caps)

Now...

When you are chief, cook, and bottle washer, you tend to forget about counting your dev time as a COST.

But that’s EXACTLY what it is.

I don’t care how much you love coding... every hour you spend doing dev for a client, you are NOT spending an hour:

Here’s the money quote:

Development work is GREAT for revenue, but SUCKS for profitability. 

Revenue is a vanity metric. What you want is profitability. 

—J


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