How to build a business around an open source project? [duplicate]

Question

This question already has an answer here:

• How can large open source projects be monetized? 6 answers

I am working on a web app that is currently open source (MIT) and I would like to keep it that way. To date it's been a hobby thing but I'd like to be able to spend more time on it (I have a 1 year old) so I'd like to find a way to fold it into the consulting business at which I'm a worker & owner. How do I make the case to my company that this is a worthwhile investment? I'm curious in particular about the open source piece (I know that getting traction with an app is not easy but that's a separate discussion). What if we release the app and it takes off, but then some folks decide they don't want to pay and they set up their own instance?

I understand that there are real costs involved in supporting and maintaining a web app. But support and maintenance are different than funding new feature development, and this is what I'm curious about. Feature dev costs a lot of money. We are not interested in rent-seeking (earning more than the cost of the services we provide plus a modest profit), but we don't want to get undercut and lose our shirt either.

Let's say it legitimately costs $1k/month to just keep the app running and answer customer questions. Then let's say we need to spend $5k/month on feature dev. If we charge our users enough to cover the $1k + $5k + a modest profit, what's to stop someone else from setting up their own instance (open source!), charging just enough to cover the $1k in support costs, and simply slurping up every new release our people push to master?

Is this why folks like GitLab are "open core", but keep certain feature sets proprietary?

How do folks like Discourse, who are totally open source, make it work? In fact I see that there is discoursehosting.com which sells instances starting at $20/mo while Discourse themselves charge $100/mo. Why does anyone pay the $100? I am baffled.

Answer 1

There are many ways your company can make money producing open-source software, including:

• Selling support (RedHat)
• Selling custom development (Varnish)
• Selling permissive licensing (PyQT)
• Selling derivative closed-source software (Nginx)
• Selling it as a service (Wordpress)
• Selling compiled binaries
• Donations
• As advertising for other products or services
• And more.

Answer 2

This is a struggle that I am going through my self.

Where are you in the cycle? Are people actually using the application? Have other developers contributed on your Open Source. What is the app - after all it is Open Source?

If you are looking for funding then don't limit yourself to the company you work for and have a solid business plan and some free loaders to prove the market.

This is fairly common model. Most of the web sites today are open source (e.g. Drupal and Wordpress).

From what I understand is there is no protecting your Open Source. Under the MIT license you must attributed (to my understanding).

You (and others) can still charge for the code, maintenance, and enhancements.

Why Open Source

• Capital
  Attorneys (contracts, licenses, enforcement) are expensive
  Marketing is expensive - a lot easier to get someone to try something for free
• Other developers will contribute
• Test Free testers
  Lots of people that would not pay but they will use it free
• Risk
  Customers are getting smarter about risk and realize if you go under the product continues
  The have been burnt by a discontinued product
  They are starting to trust this thing called the Cloud
  Cloud goes with Open Source as on site install and support is expensive

At any time you can stop making enhancement to the Open Source and create a commercial product with more features.

You can even get people to pay for enhancements that go back into the Open Source. That way you are not supporting multiple version and the customer can stay on the main code line with bug fixes and other updates.

Pay $100 / month for piece of mind they have support is nothing to someone that does not want to take on support. Hopefully you have a target customers that don't have programmers on staff.