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Open source software can be used for commercial purposes. It is said that

You can even sell Open Source software.

How does this work?

If I sell my open-source product (copyleft or permissive), there is nothing to prevent the next guy from selling it as well. Because of this, it is not clear how money can be made directly from an open source product.

How can you have free-as-in-speech without also having free-as-in-beer? Examples?

Note: This question as well as this one ask about general ways to make money in Open Source. There are many ways to make money around and tangential to the software, upon which a business can be based, but what about selling the software itself?

Community
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  • With closed source proprietary software, you are not at all sure to be able to sell it with profit. Even for large corporations like SAP, the rumors go that the license cost don't pay the software. The profit is made on services (like for [free software](http://en.wikipedia.org/wiki/Free_software) which is IMHO a better word that open source) – Basile Starynkevitch Apr 03 '15 at 04:34
  • Without knowing what kind of software you are thinking about, it is difficult to answer. – Basile Starynkevitch Apr 03 '15 at 05:10
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    Make your software insanely configurable (think SAP) and charge for configuration. – Jaydee Apr 03 '15 at 08:52
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    When you have more questions about possible open source business models, you might want to commit to the [Open Source Stackexchange](http://area51.stackexchange.com/proposals/82234/open-source?referrer=LYVOhcyWjB2btmuqLjy44w2) proposal so it can go into beta phase. – Philipp Apr 03 '15 at 10:19
  • This is a good question and the answers confirm that no you can't make money directly from selling open source software, you have to write the software and then do something additional on top of that. I don't know why the question has been closed as a duplicate because they are different questions. If you want to have your own business open sourcing libraries you write may be a good idea Ito speed their development but open sourcing the final application is likely to be a bad idea. – Paul Taylor Nov 14 '15 at 23:17
  • Just to add (and somehow I cannot make this an answer): I believe the 'you can sell open source software' is how things worked in the past before wiedespread Internet. Like 20 years ago (or is it almost 30 years..?), you could go to the bookshop, and buy Suse Linux (on CD, or Floppy disks) including a nice printed handbook. This was a common way to aquire Linux (since if you were rich you had a 2400 Baud Modem, but nobody was rich enough to download linux with that....). Nowadays the selling of physical copies is not a model anymore, I think. – lalala Nov 09 '20 at 18:10

5 Answers5

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There are several business models for Free Software (which I feel is a more interesting terminology thant Open Source), and you should also look into the FSF site and its what is free software page.

Notice also that even proprietary software is often non-profitable thru licensing. It is rumored that the development costs of SAP software is not paid by the pricy tag of the software licenses they are selling (and the same is probably true for Windows). The profit is even for them made around services.

However, free software has also a major benefit : the community working on it. Hence, it does usually happen that free software has good quality (often better than for proprietary software).

There are several books on Economics of Free Software (or Open Source). I found interesting The Success of Open Source by Steven Weber. An important notion is Externality

BTW, you generally don't sell profitably software (even proprietary ones). You sell something else, and you have to identify what that else is (it really depends on your case).

On the corporate side, many companies are spending many billions of dollars (or euros) on free software, many of them are paying developers to work on it (a vast majority of developers on FireFox, Linux Kernel, GCC are paid full time to work on free software development). And several companies are specialized on free software development and are making profit (usually thru "service", "support", etc...)

At last, I don't believe that it is easy to sell software with profit (a lot of proprietary software projects are failing!), and probably not easier than selling support or service on free software.

Basile Starynkevitch
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Modifying open source software. Sometimes people need open source software to do something it doesn't already do and no one is willing to do that for free. So a company might pay someone to do it for them.

For instance, a company might want to release some hardware running linux. But their hardware requires new drivers. So they pay someone (or maybe some company) to write the requisite drivers. They typically pay a fairly large fee as this is a one-time sale as these drivers are then open source. If you charge $100k, you only have to sell one and in this situation, it may be well worth it to the hardware manufacturer to pay $100k for that one driver.

Or in a related example: I create a router. I use linux to power that router. I then sell that router in Best Buy for $79. In essence, I am selling linux as part of my package. No one can really undercut me there because the OS is useless without the hardware I sell.

Gort the Robot
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You assume that the recipient wants to give away your software. It's possible that your customer has a vested business interest in not sharing the software. For example, if you sell an open-source industry-specific application to a business, that business might want to keep that application out of the hands of competitors in the same industry. (Of course, this is a bit of a degenerate case, since it doesn't actively demonstrate any of the benefits of open source software.)

Otherwise, yes, the market value of any freely-distributed software that you have written will rapidly approach zero. As soon as the software leaves your control into the wild (now assuming pro-sharing recipients), the software is no longer salable. Therefore, your open-source software holds the greatest potential for monetary value before you release it. This can utilized by at least two models:

  • The ransom model, where you advertise the existence of the software (or soon-to-be existence) but do not release it until you've collected enough money. This could be implemented easily on a crowdfunding site like Kickstarter.
  • The paid enhancement model, where customers pay you to prioritize development of specific features.

Otherwise, to make money, you'll need to sell something else, like support contracts or a legally-enforced guarantee that your software will work safely for a particular domain.

apsillers
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  • "*ransom model*" sounds quite malicious. I prefer the term "[Threshold Pledge System](https://en.wikipedia.org/wiki/Threshold_pledge_system)" – Philipp Apr 03 '15 at 10:21
  • I'm confused about your first paragraph. How would the business "keep that application out of the hands of competitors"? Doesn't open-source mean (by definition) that their competitors can access the source code freely? – Jordan Mitchell Barrett Jan 16 '22 at 09:28
  • @Jordan I see how my language here wasn't super clear: I meant, suppose you sell an application, e.g., that makes use of GPL components, so it must be offered to purchasers under the GPL. Normally, this is a one-way ticket to to your application rapidly reaching everyone free of charge because the recipient shares it publicly; however, if the recipient has a business reason not to share it (to keep it out of competitors' hands), this doesn't occur. Competitors can only access the source code if the purchaser chooses to share it. I use "open source" to refer to the set of rights granted. – apsillers Jan 16 '22 at 12:29
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When you sell something -- anything -- you are trading something of value (the product, services or experience) for something of value (money). When you sell open source software, what you are typically selling isn't the software, but rather the services and experience that you've bundled with the software.

For example, you may have made an installer that takes the pain out of gathering dozens of dependencies. Or, you provide 24x7 support. Or, you provide consulting services along with the software.

You are correct, that the next guy can sell the same software. To make a viable business, you must provide something in addition to the software that the other guy can't.

Bryan Oakley
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  • Makes sense, thanks. But that word "typically" though... other options? –  Apr 03 '15 at 02:03
  • @digitgopher: the other option is to just sell the software. It's an option, though I don't know if anyone is doing it for the very reason you cited - someone else can sell the exact same thing. – Bryan Oakley Apr 03 '15 at 10:50
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The other answers have already shown you how to make money off software without making money directly off the sale, however, there is still one reason why someone would straight up buy your software: some people or organizations like to have someone to sue, and it is easier to sue someone you have given money to (and thus have a contract of sale with) than someone who gave you something for free.

Of course, this means that technically speaking, they are not really paying you for your software, but rather for the ease of suing you, but it's probably the closest you can get.

Jörg W Mittag
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