Some passive income ideas for software engineers are:
- Doing local lead generation
- Creating software product
- Creating mobile app
- Creating online course
- Writing a technical block
- Starting a YouTube channel
- Starting a tech-blog
- Investing in dividend-paying stocks
- Investing in real estate
- Flipping websites and domains
As a software engineer, you have the potential to earn a good salary, but generating passive income can further supplement your earnings. Passive income is money earned without active involvement, which can be appealing given your technical skills. You can create automated systems, develop software products, or manage online platforms that generate revenue with minimal ongoing effort.
You can try creating and selling digital products, developing subscription-based services, or setting up lead generation websites for local businesses. These ventures can provide financial security, career flexibility, and the freedom to pursue personal projects or interests. However, finding the right passive income idea can come with initial challenges such as debugging issues, market misjudgments, and a significant time investment upfront.
According to EntropyRX, building software is far from passive income. While successful software products can have high profit margins because of their scalability. He mentions that ongoing maintenance, updates, and sales efforts are still required. Additionally, he added that software quickly becomes obsolete. It makes it difficult for a sole developer to achieve true passive income with this idea.
Chillysurfer points out that options for truly passive income are limited. Besides developing software, content creation stands out as a viable choice. He highlights that books, blogs with ads, and videos have the potential to generate ongoing revenue once created. It offers a consistent income stream with minimal ongoing effort.
This article will present 16 passive income ideas for software engineers to try. We will discuss the opportunities you can tap into for each passive income idea. Additionally, you will learn some steps on how to choose passive income ideas while working as a software engineer. Is it really possible to create another income stream? In the end, we will discuss why local lead generation is a fitting passive income idea for software engineers.
1. Local Lead Generation
Local lead generation involves creating a system to attract potential customers. It's for local businesses. This includes building websites and optimizing them for search engines. Also, you are using online marketing strategies to capture leads. According to a survey by BrightLocal, 60% of local businesses rely on lead generation services to grow their customer base.
Many local businesses need a strong online presence and will pay for quality leads. For instance, a report by IBISWorld shows that the plumbing industry in the U.S. is worth $113 billion. It highlights the potential for lead generation in this niche. Creating a good lead system can give local businesses a steady flow of potential clients. This helps businesses grow their customer base, and you can earn passive income.
To start with local lead generation, identify a specific niche, such as plumbing, landscaping, or dental services. According to a study by CallRail, the average cost per lead for home services like plumbing is $25. It can help you set your rates. After choosing a niche, you can build a simple, professional website targeting local keywords like “best plumber in [City].” It is important to use search engine optimization (SEO) techniques to ensure the website ranks high on Google. According to HubSpot, businesses that prioritize SEO are 13 times more likely to see positive ROI.
For example, let's say you have created a lead generation system for local law firms. You charge a commission of $50 for each lead generated, and you generate 100 leads per month. That's a passive income of $5,000 per month.
2. Software Product
Making a software product involves creating an app or tool. It solves a specific problem or meets a need. This could include mobile apps and web apps. It could also include desktop software and plugins. According to a survey by Statista, 42% of small businesses use software to manage their operations.
For example, you can make a project management tool for small businesses. Or, you can make a mobile app that helps users track fitness goals. The goal is to create a product that can be sold or licensed. It can generate ongoing revenue.
Here are some key steps to follow when creating a software product for passive income:
Examples of software products that can generate passive income:
3. Mobile App
Creating a mobile app is making an application for smartphones or tablets. It addresses a specific need or provides a particular service. This can include productivity tools like task managers and entertainment apps like games. This involves writing code and testing the app. Also, you're making it better based on user feedback. According to a report by App Annie, the average user spends 4.2 hours per day on mobile apps. It highlights the potential for engagement.
With the increasing use of smartphones, there is a growing demand for innovative and useful apps. For instance, a survey by Statista found that 25% of U.S. adults have downloaded a fitness app. It indicates a strong market for health-related applications. You can leverage your coding and problem-solving skills to create apps that fill gaps in the market or improve existing solutions. This can lead to a steady stream of passive income. It comes from app purchases, in-app ads, or subscriptions.
You can start with platforms like GitHub and Stack Overflow. They provide valuable resources and community support during development. After the app is ready, distribute it through major app stores like the Apple App Store and Google Play.
Stuart Hall created an app in just six hours, which achieved 2.3 million downloads, generated a full-time salary, and was acquired after 18 months. It started as an experiment. Hall developed a 7 Minute Workout app, using the popularity of fitness trends. After a simple development and submission process, the app was approved and gained traction on the App Store.
The real breakthrough came when the app was made free. It resulted in a surge of downloads. Over time, Hall added in-app purchases, HealthKit integration, and other features. He maintains steady growth and revenue. Eventually, Wahoo Fitness noticed the app and acquired it. Hall's journey shows the potential of creating a simple, well-targeted app and relying on organic growth and strategic improvements.
4. Online Course
Making an online course involves designing and creating educational content. This typically includes video lectures, written materials, quizzes, and interactive assignments. According to a survey by LinkedIn Learning, 57% of professionals want to learn new skills to advance their careers. You can use your expertise to make courses. You can cater to the needs of aspiring programmers, developers, or tech fans.
For example, a software engineer can create a course on advanced Python programming or mobile app development. This can lead to passive income. It comes from course fees, subscriptions, or partnerships. You can also partner with online learning platforms like Udemy, Coursera, or Teachable. After the course is ready, promote it through social media, email marketing, and search engine optimization.
5. Technical Book
Writing a technical book entails creating a detailed guide. It covers a specific technology or programming topic. This could include topics such as software development methods. It could also cover specific programming languages and frameworks. According to a survey by TechRepublic, 45% of IT professionals read technical books to stay updated with industry trends.
For example, you can write a book on mastering JavaScript or developing scalable web applications with React. The goal is to provide in-depth knowledge and practical insights that readers can apply in their work or studies. According to a report by Statista, the average price of a technical book is around $40. It indicates a potential for significant revenue.
You can use your experience and insights. You can create a book that addresses common challenges and provides solutions. This can attract a wide audience. It will include students, professionals, and enthusiasts who are looking to enhance their skills. You can do this through traditional publishers. Or, you can use self-publishing platforms like Amazon Kindle Direct Publishing. You can generate ongoing revenue from book sales.
6. Create a YouTube Channel About Software Engineering
Creating a YouTube channel about software engineering pertains to producing and sharing video content on YouTube that focuses on coding or programming. For software engineers, this could mean creating tutorials. You can also make coding challenges or discuss new technologies and trends. According to a survey by Wyzowl, 86% of people use YouTube to learn new skills. For example, you can start a channel that teaches viewers how to build web applications using different frameworks like Angular or Vue.js.
Video content is very popular. There is a big demand for educational and informative tech videos. According to a report by Statista, 37% of internet users watch online tutorials and educational videos regularly. Starting a tech tutorial YouTube channel can lead to various revenue streams. These include ad revenue from YouTube, sponsorship deals, and affiliate marketing.
Tim Ruscica, founder of Tech With Tim Inc. and lead software engineer, created the popular YouTube channel Tech With Tim. Tim's channel covers programming tutorials. It covers software engineering and machine learning with Python and JavaScript emphasis. With 1.53 million subscribers and over 1,000 videos, Tim has built a large and engaged audience. His mission is to provide high-quality tech and programming tutorials. He also offers free resources to help viewers code and succeed in software engineering.
7. Blogging
Starting a blog involves writing and publishing articles on a specific topic, such as tech or programming. You can share knowledge about coding practices. You can also share software trends, tutorials, and your experiences in tech. According to a survey by HubSpot, 60% of marketers say blog content creation is their top inbound marketing priority.
For example, your blog can focus on explaining complex algorithms. You can also review new programming languages. Or, you can provide step-by-step guides for making applications. There is a continuous demand for high-quality, informative content in the technology sector.
8. Dividend-Paying Stocks
Investing in dividend-paying stocks means buying shares of companies. They give shareholders a portion of their earnings as dividends. This means selecting stocks from companies with a history of paying regular dividends. These investments provide reliable income. It comes from regular dividend payments and can be reinvested to compound returns over time. For example, according to NerdWallet, the average dividend yield for S&P 500 companies is around 2%. Additionally, well-chosen dividend stocks can appreciate in value. It offers capital gains alongside the dividend income.
When choosing dividend-paying stocks to invest in, pick ones with a history of steady dividends. A report by Dividend.com says companies like Johnson & Johnson and Procter & Gamble have paid dividends for over 50 years. This makes them reliable choices. Look for companies with a long history of paying dividends. Pay attention to their dividend growth rate. For example, Seeking Alpha says a company with a 5% annual dividend growth rate is stable. A high dividend yield may be tempting. But, you must consider the company's finances and its ability to keep paying the dividend. Morningstar says a payout ratio below 60% is usually a good sign. It shows a company can keep its dividend.
9. Real Estate Investing
Investing in real estate means buying properties to make money. This can be from rent or from the properties' value increasing. This can mean buying residential properties, commercial buildings, or even vacation rentals. A report by Roofstock says that single-family rentals have an average annual return of 9%. It's a lucrative investment. For example, a software engineer might buy a duplex and rent out one unit. You can live in the other, or buy a condo to lease to tenants.
Real estate investments can provide steady rental income. It can cover mortgage and other expenses and generate extra profit. According to Zillow, the median rent price in the U.S. is $1,700 per month. Over time, properties often increase in value. They can offer the potential for big gains.
Platforms like Fundrise or Roofstock offer the same opportunities. They let software engineers invest in real estate with lower upfront costs and less hassle. These platforms allow investors to pool their money. They invest in properties managed by pros. They earn passive income from rent.
Justin is a software engineer and entered real estate investing successfully. He did it with careful planning and research. He started by networking with experienced investors. Aslo, he read books by experts like Robert Kiyosaki and David Lindahl and listened to podcasts like BiggerPockets. Justin focused on areas with powerful jobs and population growth. Following the 1% rule, he ensured the monthly rent was at least 1% of the property's price, and aimed for a minimum 7% cap rate.
Justin uses tools like DoorHacker and found a 2-bedroom rental property in suburban Cleveland that met his criteria. With a budget of $20,000, he secured a property with an 8.5% cap rate, promising a solid return. Justin's success shows that a good strategy and ongoing learning can lead to financial independence.
10. Websites or Domains Flipping
Flipping websites or domains means buying undervalued ones and improving their value and selling them for a profit. This can include enhancing website design, increasing traffic, and improving content or functionality. According to a report by Empire Flippers, the average profit margin for website flipping is around 30%.
For domain names, it might involve identifying unique, desirable names that can attract higher bids. Also, target names that are short, memorable, and relevant can make them more attractive to buyers. To start, conduct market research to identify niches or domains with high demand. For example, you can buy a domain related to a trending topic. Or you can buy an existing website with potential, improve it, and then sell it for more. You can check Flippa, Sedo, and GoDaddy Auctions to find undervalued websites and domains.
Flipping websites or domains presents a valuable opportunity for software engineers. They can easily assess websites and domains. They can make needed improvements and optimize them for better performance. Also, flipping can be done in your spare time. This makes it a flexible and scalable side hustle that can generate passive income.
11. Micro-SaaS Business
Building a Micro-SaaS (Software as a Service) business means creating a small software solution. It targets a specific niche. Traditional SaaS serves a broad audience. In contrast, Micro-SaaS focuses on delivering a highly specialized service or tool.
For example, you can make a project tool for freelance graphic designers. The tool can include features like client management, invoicing, and design project tracking. Graphic designers could customize them to meet their unique needs. By fixing problems in a small market, you can make a good product. It will attract and keep loyal customers.
This approach lets engineers use their technical skills to develop a product that solves specific problems in a niche market. You can start many Micro-SaaS businesses on a small budget. And, you can turn them into money making operations. Also, SaaS businesses typically use a subscription-based revenue model. It can bring in consistent, recurring income.
12. Special Effects, Functions, or Animations
Selling special effects, functions, or animations involves making and giving out digital assets. These assets improve the look or use of websites, apps, or digital media. It can be CSS animations, JavaScript functions, or graphic effects. According to a report by Envato, top sellers on their platform can earn over $1,000 per month from digital assets.
Software engineers have a big chance of selling special effects, functions, or animations. The demand for pretty and interactive digital experiences is growing. So, there is a constant need for high-quality digital assets. A survey by Creative Market found that 70% of designers buy digital assets. They do this to save time and improve their projects. You can use your coding and design skills to make unique products. You can sell these assets on marketplaces like Envato, Creative Market, or through a personal website. This approach allows for continuous revenue. Digital products can be sold many times without extra costs.
Engin Arslan initially studied Materials Engineering but soon realized it wasn't his passion. He had an interest in graphics and a technical background. He switched to 3D graphics inspired by a graduate from his program who became a successful VFX artist in LA. Knowing someone had made this transition validated his goal. Engin eventually became a VFX artist. Later, he shifted careers to become a Senior Software Developer and Front End Engineer at Crowdstrike.
13. WordPress Plugins or Chrome Add-Ons
Creating WordPress plugins or Chrome add-ons involves creating software extensions. They enhance the WordPress websites or the Google Chrome browser. For example, a WordPress plugin might add a new feature to a site, such as improved SEO tools or advanced form builders. A Chrome add-on could do the same. It could give extra browser powers, like better security or productivity tools. According to BuiltWith, over 40% of websites use WordPress. It proves the large market for plugins.
The vast number of WordPress users and Chrome browser users creates a large market for these extensions. You can make good plugins and add-ons. According to Extension Monitor, there are over 180,000 Chrome extensions available. You can sell these extensions on platforms like the WordPress Plugin Directory or the Chrome Web Store. This lets them generate passive income. The potential for recurring revenue comes from subscription models or premium features.
14. Invest in Other Tech Companies
Investing in other tech companies means buying equity or shares in them. It's done hoping to earn a return on the investment. You can do this by buying stocks in public companies. Also, by taking part in private equity deals or by investing in startups. For example, you can buy shares in big companies like Apple, Google, or Amazon. You might also invest in startups through platforms like AngelList.
Investing in other tech companies presents a significant opportunity for software engineers. The technology sector is known for its rapid growth and innovation. It can lead to substantial financial returns. According to a survey by Statista, the average annual return for tech stocks over the past decade has been around 20%.
15. Blockchain PoS, Lending, and NFT
Starting a venture in blockchain Proof of Stake (PoS), lending, and NFTs involves engaging with various blockchain technologies to generate passive income. Proof of Stake is a consensus mechanism. The system chooses validators to create new blocks and validate transactions. The selection of validators is based on the number of coins they hold and are willing to "stake" as collateral.
Blockchain lending involves providing cryptocurrency loans to earn interest. NFTs (Non-Fungible Tokens) are unique digital assets. The verification of NFTs is done using blockchain technology. According to DeFi Pulse, the total value locked in DeFi lending platforms is over $50 billion.
For example, you can stake cryptocurrency on a PoS network. You can lend digital assets on platforms like Aave or Compound. Or, you can make and sell NFTs in marketplaces such as OpenSea. These blockchain technologies offer various ways to generate passive income. PoS allows software engineers to earn rewards by validating transactions. Lending platforms offer interest from crypto loans. NFTs provide a way to make money from digital creations.
16. Get Paid to Play Video Games
Getting paid to play video games pertains to earning income by engaging in various activities related to gaming. This can include streaming gameplay on sites like Twitch or YouTube. It can include competing in esports, testing games for developers, or making content like reviews and tutorials. According to a report by Streamlabs, the average Twitch streamer with 50-100 viewers can earn around $500 per month from ads and donations. For example, you can stream your gameplay. You can make money from ads and donations. Or, you can test new games and give feedback to developers.
The gaming industry has seen substantial growth, leading to various monetization avenues. A report by StreamElements says over 1.2 million people watch gaming streams on Twitch. This shows an enormous interest in game streaming. You can use your technical skills to make great content and analyze game rules. Also, you can offer key insights in testing.
To get paid to play video games, pick how you want to make money. You can choose from streaming, testing, or content creation. Then, set up accounts on platforms like Twitch, YouTube, or specialized game testing sites. You should buy high-quality streaming equipment and software. This will ensure a professional presentation. For game testing, you can join platforms like PlaytestCloud. You can also sign up for beta testing programs offered by game developers. These options provide opportunities to earn income.
Andy Collins is a 26-year-old software engineer from Chicago. He pursued a professional esports career in Valorant. Andy is inspired by professional gamers in high school, he honed his skills and earned a scholarship to play at Robert Morris University. This is where he graduated with degrees in computer network security and information systems. After starting his career as a software developer, his passion for gaming was reignited by Valorant.
In 2021, he joined DarkZero's first Valorant roster but was later dropped from the team. Now, Andy works remotely as a software engineer while competing in Valorant's Challengers League. His journey highlights the dedication and discipline needed to balance a job and a passion for gaming.
How to Choose Passive Income Ideas for Software Engineers?
Is it Possible for Software Engineers to Have Passive Income Streams While Working Full Time?
Yes, it is possible for software engineers to have a passive income streams while working full time. According to a survey by Stack Overflow, 75% of developers work on side projects, many of which generate passive income. Software engineers can use their technical skills to create software products. You can also develop online courses, or invest in dividend-paying stocks. It is possible to manage these activities alongside a full-time job. It provides additional income without requiring constant attention.
For example, platforms like Udemy report that top instructors can earn over $1,000 per month from their courses. They can do this while also keeping other jobs. Software engineers can balance their careers. They can earn extra money by choosing scalable passive income ideas that are manageable.
Do Software Engineers Need to Take Passive Income Courses?
Software engineers do not need to take passive income courses, but they can be beneficial. A survey by LinkedIn Learning found that 57% of professionals believe that online courses help them stay current. For example, Coursera and Udemy offer courses on financial literacy and making passive income. It's possible that these courses can help software engineers make informed decisions. Taking these courses is not mandatory. But, they can enhance an engineer's knowledge and increase their chances of generating passive income.
Conclusion: What’s the Best Passive Income Idea for Software Engineers?
Local lead generation is the best passive income idea for software engineers because it leverages their technical skills while offering high scalability and consistent income. Local lead generation involves creating and managing websites. They capture leads for local businesses. This task fits the technical expertise of software engineers because they easily build and optimize these sites. Once set up, these websites require minimal ongoing maintenance, making it an efficient use of time and skills. The ability to automate much of the process means engineers can focus on other projects or interests while still earning income.
The demand for local lead generation services is high. Many small businesses, like plumbers, electricians, and landscapers, rely heavily on local customers. But, they often struggle with online marketing. According to APSIS, 68% of B2B companies face challenges with lead generation, highlighting its critical importance for B2B businesses. Furthermore, Ruler Analytics reports that 53% of marketers allocate half of their budget to lead generation efforts. This supports local economies. It also ensures a reliable income for software engineers. Local businesses often pay for quality leads that can convert into customers.
Moreover, local lead generation offers excellent scalability. Once a lead generation website is set up and running, it needs little maintenance. This lets software engineers repeat the process for many clients. This means software engineers can manage many websites at once. Each one makes consistent monthly revenue ranging from $500 -$3,000.
The ease of scaling the business and managing multiple clients makes local lead generation a perfect passive income source for software engineers. It combines technical skills with the chance of significant financial gains.
