Yes, developer does go bad. According to Sally Beauty Supply, hair color products have freshness dates stamped on them. But manufacturer testing has shown that the shelf life of hair color product is almost unlimited if the bottle has never been opened.
Other sources suggest that most developers have a shelf life of 12 months.
Browse Sally's hair color products and developers here.
The hydrogen peroxide acts as a developer, the oxidizing agent that allows the haircolor to do its job. The peroxide opens the cuticle so that the color can penetrate. It also disperses the existing color and can lighten the hair's color level depending on the strength of the peroxide formulation.
10 Volume Peroxide is a standard oxidizing strength for permanent, no-lift haircolor. Designed for use when you simply want to add a tint or color tone to hair of the same lightness level, 10 Volume Peroxide opens the cuticle layer of the hair allowing the color molecules to penetrate and color to be deposited in the cortex.
20 Volume Peroxide is also a common strength with permanent haircolor and opens the hair cuticle like 10 Volume, but also offers lifting of the hair's level by 1-to-2 levels. 20 Volume Peroxide is used to best effect when the hairs starting level is no more than one shade darker than the color you are trying to achieve.
30 Volume Peroxide works just like 20 Volume except that it will lift the hair's starting color by 2-to-3 levels and works best when the target color is no more than two levels lighter than the starting color. It's important to remember that the stronger the developer is, the harsher it can be on your hair. You should always use a moisturizing conditioner after applying a stronger haircolor.
Learn more about haircolor levels and peroxide developer at Hairfinder.
Check out the Do's and Dont's of DIY hair coloring at How-To Hair Girl.
Get some hair care tips at Elle.