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Open Source is Generally Free, But Here’s How Companies Make Money from It

open source profitOne of the main reasons businesses, governments and other entities are exceedingly choosing open source solutions is because of the cost savings that come along with them.

Generally speaking, open source technology—which is developed by a community of enthusiastic programmers who revise and alter open source code—is free. Yet we’re beginning to see the rise of billion-dollar open source companies.

How is that possible? Let’s take a look at a few ways businesses are able to rake in significant amounts of money despite abandoning traditional proprietary revenue models:

  • Reduced costs. When companies build their service offerings on top of managed open source software, they are able to offer solutions that cost significantly less than those offered by their competitors because they save tremendously on the traditional licensing fees associated with that software. A company that uses OpenStack to run its server infrastructure, for example, will be able to offer cheaper cloud instances than a company that has to pay license fees.
  • Paid support. While open source software is generally freely available, it’s still technology, and technology is likely to act up from time to time. And when that happens, users need support. Open source companies have turned to subscription support models. Customers can use their products for free, but if something does not work optimally, they’ll have to pay to get someone to help them rectify the problem.
  • Hosted services. Open source companies offer their software for free, but many are also taking their technology to the cloud and offering it as hosted solutions. In this scenario, customers pay Software-as-a-Service subscription models, and engineers offer support and answer questions.

This is by no means an exhaustive list regarding how open source businesses make money. What, in your opinion, is the most interesting way to make money off of open source technology?

Read the original blog entry...

More Stories By Lacey Thoms

Lacey Thoms is a marketing specialist and blogger at Protecode, a provider of open source license management solutions. During her time at Protecode, Lacey has written many articles on open source software management. She has a background in marketing communications, digital advertising, and web design and development. Lacey has a Bachelor’s Degree in Mass Communications from Carleton University.

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