I recently learned about this company called Social Solutions.  They make their money by selling a software to non profit companies.

Learning about their business model made me think about how profitable software companies must be… check out the “thought flow” I had (below).

Here are the reasons why software is awesome, written from a user, developer, and sales person of software’s perspective.

#1: Everything is Software

Software From My Mac

Some of the software you will find on my mbPro

You don’t really realize it, but if you think about it – you’re using software right now.

As a matter of fact – anyone device that connects you to the internet uses software!  Computers, phones, credit card processing machines, etc…

Ever burned a CD? You used software.

Have you every wrote an essay or paper?  Did you do it by hand? No, you used software.

So software is everywhere and I’m guessing that people don’t even realize when they are using it.

Why is software everywhere, you ask?  Because of the next 3 reasons below:

#2: Software Makes Things Easy

Software solves problems, makes things faster, and probably most importantly: it makes things easy.

Sometimes a piece of software will come out that allows you to do things that you previously couldn’t do before (TweetDeck is a decent example: allows you to manage multiple social media accounts from one application).

Have you ever used Adobe software? Dreamweaver makes editing HTML very easy.  My man Chris Freeman knows all about this.

Software takes tasks that would usually require classroom training and makes them push button.

AND now-a-days, cloud-based software (which is basically any software that you can access from anywhere that you have an internet connection) is revolutionizing and accelerating the software industry… Google Apps (like GMail, Docs, Calendar) & SalesForce are good examples of cloud-based software.

#3: Software Sells Itself

Most of the time you don’t really need to “sell” software.

The software sells itself!

How many other industries can say their product sells itself?

I just remember a Chris Rock stand up:

Drug dealers don’t sell drugs. Drugs sell themselves. It’s crack. It’s not an encyclopedia. It’s not a f**king vacuum cleaner. You don’t really gotta try to sell crack. Ok?

You will never hear a drug dealer say: “How am i gonna get rid of all this Crack?”

The reason for this is simple:  see reason #2 above ;)

Burn CD’s, manage your accounting, write and format papers, browse the internet… all things that you need to do, so you buy software!

#4: Software is Ultra-Profitable

So you’re telling me that I can develop something one time and sell it unlimited times?  So wait, when someone buys my product, I don’t have to make it from scratch in order to deliver it?

Think about this: when a business wants to grow, it has to get more customers.

In service based businesses, when you get more customers you also have to hire more people, fill more seats, which costs you in both payroll expenses but also administrative headache.

In traditional product based businesses, you have to add to your manufacturing line or supply chain when you grow.

In software companies, all you have to do is have a couple support people and maybe a development team (to improve your software)… both of which you could outsource ;)

It’s no wonder that of the top 20 riches people in America (according to Forbes), 8 of them were running software companies!

Profitable Software Company Thought Flow

Social Solutions sells software to help companies organize their operations and track the company’s efforts to the outcomes they produce… most of their clients are non profit companies… some non profits get government grant money… non profits have to spend money (in order to show no profit at the end of the year) — SO –> Social Solution is indirectly getting government grant money… AWESOME!

(PS, a similar example of this can be found in the computer or IT training classestrade school industries)

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Do you have an idea for a software that could be valuable to a particular niche?

Already work for or own a software (or software related) business?  I admire you and wish you the best! … just make sure you’re ethical and providing value – because otherwise, you won’t be around for long.