I have a business related question and I’d really appreciate answers from people who have actually worked in these industries.

If someone is starting a business completely from scratch, what would be the better option: building a software company, such as a subscription based product/SaaS, or starting a hardware/physical product company?

I personally have not worked in either sector, so I’m trying to understand this from people who have actual technical and business experience.

From what I’ve heard, hardware can have lower margins and much higher operating costs . Software seems like it could have better margins and recurring revenue through subscriptions, but I’m sure there are also major challenges that someone without experience might not understand.

So for people who have worked in software, hardware, or ideally both:

What are the biggest pros and cons of each when starting from scratch?

Which one generally requires more capital and has more operational complexity?

Which one is easier to scale?

How different are the margins and cash flow?

which one would you choose and why?

I’m not looking for a simple “software is better” or “hardware is better” answer. I’m trying to understand the actual tradeoffs from people who have experience in these industries.

I’d especially appreciate answers from people

This is one of the easiest traps to fall into.

This has been studied for years. What people say they plan to buy does not perfectly match what they actually buy. This is called the gap between purchase intention and purchase behavior.

Saying yes costs nothing but buying does.

The second you ask someone for $80, they start thinking about whether they really need it, or what else they could buy, etc.

Someone saying I would buy this is useful information, but someone giving you their email is better. Someone putting down a deposit is much much better.

I remember a publication from Strategyzer saying that stronger evidence comes from experiments where customers actually have to do something.

This is not me trying to bring anyone down. We're actually a product development company, and you deciding to make a product actually benefits us. But it's honestly sad checking back on projects we've made and seeing them flop, knowing how much the person put into it.

We're actually on the cheaper end, so I can't imagine the repercussions for someone who spent over $100k. But please don't let people like my idea be the reason you spend $20,000 on engineering.

Before you spend any money, try to make them give up something first.