How to Sustainably Improve Profit Margin at Your Software Development Agency
Improving your margin is an exercise in balancing costs against the tactics you are using to generate revenue while continually working to make your team more efficient.
The most important factor when choosing a software development agency is the technology they're using. This is not the only factor, but it's the only one with a real chance of giving your project an edge in the market.
After you make a shortlist of development agencies you like and make sure they are:
You will realize all their services have very similar prices, and their development speed is pretty much the same.
This is unavoidable because they all use the same technology and the same developer pool. In fact, if one of them had a significantly lower price, it would definitely be a red flag.
Because given the same inputs, how can they produce significantly different outputs? Something's got to give. And usually, you don't want to stick around to find out what's the catch-22.
However, there is one exception to this rule. And that is when one agency is using better technology than other agencies.
Low code technology allows agencies to keep (and increase) the software quality while decreasing the development time and reducing the costs.
Most people are hesitant to try something new. This is true even in the software world, which is by far the most open and welcoming to new ideas.
But if everyone adopted new technologies at a similar speed, we wouldn't have terms like "early adopters.". Meaning some people are more ready to seize opportunities when they see them.
Low code technology is one such opportunity that allows a 3X increase in development speed with a very short onboarding time. We're talking only about 1-2 days.
This means agencies (and their clients) that welcome low code sooner will reap the biggest rewards.
At a certain point, everyone will inevitably be using low code technology. By that time, no one will have a competitive edge. Yes, everyone's projects will be more cost-effective to launch, but no one will have a market advantage just based on low code.
However, today we're still in the beginning stages of mass adoption. A company that can either reduce development costs by 3X or can launch a project 3X faster has a tremendous advantage.
On the other hand, agencies can offer development services at a much lower rate. At the same time, their profits can be higher than those of their competitors.
This is a win-win scenario for agencies and their clients, but there are additional benefits as well…
This is only possible because low code is not some new thing that requires special learning. Instead, it's an extension of existing technologies like JS, MySQL, GraphQL, and AWS.
The learning curve is slight because there is very little to learn. And developers can 3X their productivity with minimum change to their workflow.
This is also great from the client's perspective. For example, if there is ever a need to switch agencies or development teams. There will always be plenty of developers who can start being productive with low code in 2 days or less.
All the apps built through low code are automatically scalable from one to a million users (and beyond).
This is great news for clients as there will be no need to fret about a sudden surge in the user base. The app is built from the ground up with scaling in mind. So there is no need to do extra work afterward to make the app more scalable.
In short, apps built with low code are completely customizable.
This is important because tools that usually offer some kind of development speed-up are constrained in some way. It is important to note this is not the case with low code technology.
Even though there is a graphical interface with easily available drag-and-drop components, every part of the app can be customized. This is true for both the frontend and the backend.
Even though low code technology has the development speed of a prototyping tool, the result is anything but.
The resulting app is ready to be published and scaled up from day one. And all of that is possible without hiring a DevOps team.
All the necessary production-grade optimizations are part of a low code platform. And that is one of the reasons why apps built with low code are extremely stable and reliable.
In short, low code focuses on removing the need for boilerplate code. This allows developers to focus most of their attention on solving users' problems. Basically, the only thing that really matters.
When sorting through software development agencies, make sure the one you choose has a decisive technological advantage.
Low code is currently the technology with the biggest productivity impact on the market. It can triple development speed which also results in 3X lower costs.
And this is all while maintaining (or increasing) the software quality previously achieved with traditional programming.