Software development has high upfront costs related to research and development but minimal marginal costs when scaling. Once a software product is developed, it can be replicated and distributed at a fraction of the cost of producing additional hardware units. This scalability drives higher profit margins as you expand your customer base.
Software doesn't involve physical components, manufacturing, or the costs associated with supply chain logistics, which are significant factors in hardware production. This absence of physical materials and manufacturing processes inherently results in lower production costs for software. Software can be easily distributed through the internet. This digital delivery model is efficient and contributes to improved profit margins.
AI software can be monetized through various recurring revenue models, such as subscription fees, licensing, and service agreements. This predictability of income provides a stable source of revenue over time, which is attractive to investors and stakeholders.
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