March 20, 2017

follow-up question re “coding is bad for profits”

A couple people wrote in asking for clarification about a message I sent a couple days ago. The subject was “If coding is bad for profits, what am I supposed to sell?”

In it, I said that coding is not a very profitable activity and I listed a bunch of alternatives that a seasoned developer could deliver to clients in a short amount of time, with very low risk, to generate a very high effective hourly rate.

Here’s the clarification:

Coding CAN be very profitable if you do a great job value pricing your projects.

However, the way most people engage in coding projects is usually pretty low profit (i.e., being paid by the hour to do as they’re told).

Profit vs Revenue

It’s important to note that there’s a difference between profits and revenue:

Revenue is how much the client pays you.

Profit is how much of the revenue you have left after subtracting your costs.

Coding a multi-year software project can generate a lot of revenue but after you subtract your costs (i.e., your time), there isn’t a lot of profit left.

I don’t expect you to suddenly stop coding for money. It is the easiest way to keep the lights on.

But if that’s ALL you do, you’re not growing your business.

You’re just doing work.