Digital Services Business

How Profitable Is A Digital Services Business? (Updated for 2024)

Pat Walls

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Updated: September 13th, 2024

How Profitable Is A Digital Services Business? (Updated for 2024)

So you want to start a digital services business?

And the first question that came to your mind was, “well, are digital services businesses actually profitable?”

With a market size of $292B - there’s plenty of business to go around.

Especially considering:

You could start a digital services business with as low as $50
Based on our data, digital services businesses generate an average of $3.59M per year
You could see gross margins as high as 69% with digital services businesses

There’s money to be made. Don’t worry.

But, I don't want to spoil it all. Below we’ll cover everything you need to know when it comes to the profitability of a digital services business.

Let’s dive in!

Is a digital services business profitable?

Yes, a digital services business is generally a profitable business. However, you still need to consider several factors since these things always impact the overall outcome.

For instance, since average revenue is $3.59M per year with an estimated gross margin of 65%, you could expect to recover your investment within 7 months or even less.

But of course, it all comes down to how much you earn compared to the potential revenues of your digital services business.

To determine whether your business is profitable, you should earn more than your expenses in the beginning months. However, while you're in your first month, it can be challenging to know what to expect.

Therefore, you should maintain a record of your monthly expenses and income to determine whether you're meeting your goals. By doing this step, you can see how your digital services business is doing and if any changes or adjustments need to be made to enhance or maintain your efforts.

Is a digital services business worth it?

If you’re wondering if a digital services business is worth it, the answer is a big YES. With digital services businesses, you have the potential to earn $3.59M per year (this is based on data reported by real founders).

Further, you could have your initial investment back within months. Simply put, it’s a business worth a shot, especially if you have the resources and make the necessary efforts to achieve or surpass the target.

With a market size of $292B, it will be possible for you to build something that grows and turns into a flourishing business. As such, it’s the type of business you might want to consider starting.

Of course, you must learn and understand every aspect of running a digital services business to ensure success. Still, as long as you have the initial investment and can endure a few months before your actual gains, this business could be worth it.

You might want to consider reading more specifics about successful digital services businesses case studies.

Examples Of Profitable Digital Services Businesses

Here are a few examples of profitable digital services businesses, and a few more details about them:

1. Prop Media ($186K/year)

Ebs Turner started Prop Media after realizing that traditional advertising was cost-inefficient for companies. His breakthrough came during his university years while balancing exams and entrepreneurship, eventually growing his London-based marketing agency to $18,000/month.

Is it profitable? Yes
How much money it makes: $186K/year
How much did it cost to start: $0

How I Started A $15K/Month Marketing Agency Specialised In Lead Generation

A 25-year-old entrepreneur shares his journey of starting a property marketing agency, with a current monthly income of $18,000/month, and divulges the importance of having a niche and going all-in on client results and experience.

Read this case study

Read by 6,822 founders

2. Aun Digital ($240K/year)

When a friend's cleaning business couldn't afford a website, Aun Ali discovered that many UAE startups faced similar challenges, inspiring him to launch Aun Digital. The firm offers affordable, comprehensive digital services and now generates annual revenue between $200,000 and $300,000, serving 20 regular clients.

Is it profitable? Yes
What's the gross margin? 24%
How much money it makes: $240K/year
How much did it cost to start: $60K

How I Scaled My Web Design Agency To $250K/Year

Aun Digital, a UAE-based web design company, generated $200,000 to $300,000 annually by offering affordable and reliable digital services to small businesses, startups, and medium-sized enterprises, with 20 regular clients per year and an average project cost ranging from $10,000 to $15,000.

Read this case study

Read by 692 founders

3. Gumroad ($21.2M/year)

Sahil loves building stuff. He really enjoyed the process of taking a problem coming up with a solution, and then shipping a prototype of that solution to see how good his concept was. Before finishing college he had already shipped a dozen products. Most of the time, they weren't that great.

But sometimes something works out really well, and then he has to decide if he actually wants to work on the idea some more. Very rarely, the answer is yes. That was the case with Gumroad. The question at its core was really compelling to him: How easy could one make it to sell something?

Is it profitable? Yes
What's the gross margin? 69%
How much money it makes: $21.2M/year
How much did it cost to start: $0

Gumroad: Revenue, Profit, Growth, & Story Behind It All

Learn how Sahil Lavingia grew Gumroad from a weekend project into an e-commerce powerhouse generating $21.2 million annually, using nothing more than elbow grease and cold emails to drive their early growth.

Read this case study

Read by 765 founders

Learn more about starting a digital services business:

Where to start?

-> How much does it cost to start a digital services business?
-> Pros and cons of a digital services business

Need inspiration?

-> Other digital services business success stories
-> Marketing ideas for a digital services business

Other resources

-> Digital services business tips

How much can you make with a digital services business?

With a digital services business, you can make an average of $3.59M revenue per year (based on data reported by real businesses).

You can start with an initial investment as low as $50. Then, with proper knowledge and sustained effort, you could have an ROI (return of investment) within 7 months.

How much does a digital services business make a week?

Based on our data, average weekly revenue for a digital services business ranges around $74.8K. As such, you could see monthly revenues of $299K.

To know if your digital services business achieves the weekly profit target, you need to keep track of the total earnings you get per day. Afterward, you'll want to consider subtracting the expenses you have daily.

Learning your weekly profit can also show whether you're hitting your target goal for your digital services business.

How much do digital services businesses owners make?

The income of a digital services business owner can vary depending on various factors such as location, size, competition, and the owner's business skills.

But to give you some idea, the weekly revenue of an established digital services business is about $74.8K. But this can be lower or higher depending on so many factors - it's almost impossible to say exactly.

While the potential for earning a good income as a digital services business owner exists, success in this field requires a commitment to providing quality products and services and building a strong reputation within the community.

Digital Services Business Profit Margins

Generally speaking, a digital services business can expect profit margin of around 65%. Profit margins refer to the percentage of revenue that remains after deducting all expenses associated with running a business. In the case of a digital services business, profit margins can vary depending on various factors, such as the type and quality of products sold, the size of the store, and the level of competition in the area.

However, these figures can vary depending on the pricing strategy, inventory management, and overall efficiency of the business. To maintain healthy profit margins, digital services business owners must focus on managing costs, negotiating favorable supplier terms, and providing high-quality products and services to attract and retain customers. By doing so, digital services business owners can ensure long-term sustainability and profitability for their business.

Digital services business owner salary

The salary of a digital services business owner is an unpredictable figure. It's significantly influenced by numerous factors, including the store's location, its size, and the degree of competition. An owner of a well-established digital services business, in a prime position, might see an average weekly salary around the ballpark of $48.6K.

But it's worth noting, such numbers aren't always consistent. The earnings can vary wildly, potentially swinging by as much as 80% either way.

Achieving consistent success and maintaining a reliable income stream in this industry requires a deep commitment. It's imperative to offer high-quality products, deliver impeccable customer service, and nurture a trusted bond with the community you serve.

Conclusion

In a nutshell, based on many of our examples, a digital services business may be a promising business to start - but the success of your digital services business mostly depends on your effort and your approach.

If you focus on these, you'll have a much higher chance of a profitable digital services business.

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Starting A Digital Services Business: Everything You Need To Know

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