Making Money Using Open Source Software?

GamblerZG asks: "As many of us probably know, convincing people to run Free Software can sometimes be a tedious task. However, there are a lot of factors that help us in that regard, and, perhaps, the biggest of them is a simple truth: Free Software is free. It's hard to argue with such statement. I know it, because I faced it today, trying to convince my fellow co-worker that it is possible to profit by writing GNU-licensed code. 'How company can make money, if its products are available for free?' That was a valid question indeed, and I could not find any simple answers to respond with. That makes me wonder, whether there are articles on the Internet, which explain and analyze how Open Source business models work? Do you know any ways to prove that such models can be profitable?" It can be done, you can check out a recent interview with an Open Source Entrepreneur on NewsForge for some hints. What other ideas and business plans do you think would be a good match for a business with an Open Source core?

Comments

The product is free; support isn't

[spookymonster]

Charge for support, customization, and installation. Show the customer that your value doesn't end when the code goes gold.

One Possibility...

[bloggins02]

Make software that is VERY extensible. So much so that the open-sourced "guts" of the software are pretty much a framework for the extenstions.

Then, sell consulting to design, write, install, support, and maintain those extensions.

It's possible.

[rafael_es_son]

Just take a quick look at IBM announce today they're making 38.8 million off Open-Source-based services on a single location in the span of four years.

If that is not money, I dare not fathom what is.

Re:It's possible.

[Money for Nothin']

Sure, but did they make $38.8m off of open-source based development?

No, IBM did not. They made that money off of support, not development.

This is easy

[Tom7]

This is easy: Charge for the things you do. Making software isn't easy--it takes time and effort--so you should be paid to make software. Supporting software isn't easy, either, and so you should also be paid to do it. (Making copies of software is easy, so it's not fair for you to be paid to do it.) Neither of these sources of income are incompatible with free software. It's simply a matter of compensating people more directly for the services they provide.

It's not the software that matters

[Doc Ruby]

Successful companies do not produce "products" so much as we produce "customer satisfaction". Products are necessary props in producing satisfaction, but they're not the only necessary props. Software is used to produce that satisfaction. The programmer's dream is to work only with our computer, producing that "killer app", and publishing it for the hungry masses to consumer. The reality is that customers must be sold tom if they are to pay, and that software is part of the sales process. So keeping the source closed is really sleight-of-hand, a way to protect inferior code from competition. Binary-only software is no less piratable than source code, especially with so many architectural layers that can be replaced with rebranded wrappers. Profit measures the surplus value in the *relationship* between vendor and purchaser. So open source is no different from closed source software in its role in making money. If anything, open source is advantaged in improving the relationship, and in offering more opportunities for satisfaction, as well as reducing the costs of delivering that satisfaction - hence more profit.

Wrong question

[JimDabell]

'How company can make money, if its products are available for free?'

Simple answer: it's extremely dificult to do so.

The question you should be asking is 'How can a company make money, if it gives away software for free?', and the answer should be more obvious - it can do so if its product is not the software it's giving away.

For instance, IBM's "product" is the tailor-made services and consultancy it provides. The software is merely a tool they use to provide it.

You might argue that keeping such tools to yourself is a commercial advantage over your competitors. That's true to an extent, but there are also downsides - e.g. if you provide your own proprietary operating system instead, you don't get benefits contributed by the community, and your competitors are more attractive because there is no lock-in.

Re:No-brainer

[operagost]

Offer customization services. Then you will be able to sell maintenance agreements. If someone wants to have your software integrated with their funky app, they won't necessarily have the expertise to do so. Get the specs and make the modifications for them (then release the source code and binaries to them).