One way or another, everyone needs to eat -- and that includes all of you open source people too. Fortunately, there are as many ways to make money in the world of open source as there are people who try it. Here's a run down of the top models.
Support Contracts and Licenses
There are many different ways to approach making a living, or at least covering your costs, with open source. Still, there are some common business models that you'll see throughout the open source marketplace.
Often the pay offerings are focused on the enterprise and other large institutions.
For example, many corporations have policies stating that they can't use software for their infrastructure unless they have paid support -- in case something goes terribly wrong. Since in the open source world, anyone can offer paid support for a particular project, the key is differentiation. You have to make sure that your offering stands out in a crowd.
One way of standing out is to offer support for your own project. If you're the lead developer (or at least a core developer), people know that you know the software inside and out, making you an excellent choice to diagnose their problems.
Customers also know that if you're part of the core team you can advocate for their particular needs when it comes to project priorities.
There are plenty of individual developers or small teams making a living through paid support, often as an afterthought after a project becomes popular and clients come knocking. In some cases, however, companies are formed to back open source projects with services like this in mind from the beginning.
Bill Robinson, VP of the Americas for Alfresco Software (news, site) says being a commercial company behind an open source project, "gives us the ability to deliver enterprise standard service level agreements -- a must for companies and organizations deploying enterprise content management solutions."
Commercial "Enterprise" Upgrades
There's occasionally controversy about offering a free version of an open source project to the masses and a fancier version for those willing to pay for it.
At times this controversy comes from the fact that the free versions offered by some open source vendors have so few features, or are so poorly supported, that they're nearly useless. In these situations more cynical voices will assert that vendor following this approach are simply using open source as an inexpensive marketing ploy. At other times the arguments revolve more around philosophical issues.
Commercial upgrades can come in a number of different forms:
Paid Add-On Modules
For example, there's the idea of purchasing specific add-on modules for specific tasks. Many open source projects such as Joomla! (news, site), Drupal (news, site) and Plone (news, site) have huge ecosystems where small companies evolved to deliver and support single pay modules, while others grew into more sophisticated shops offering multiple modules, support and other value-added services.
Different Subscription Editions
One example of a company that offers different levels of products is DotNetNuke (news, site). According to Shaun Walker, Chief Architect and Co-Founder of DotNetNuke Corp, the open source DotNetNuke project was founded in 2002, and the company was founded later in 2006.
In 2009, he says, they "launched a series of paid subscription products (our Professional, Elite and Elite Premier Editions) which have been very successful, garnering nearly 500 customers during 2009. These Editions are built on the same open source core as the free DotNetNuke Community Edition."
DNN subscription customers get additional features designed for the enterprise, such as, "advanced content workflows, granular user permissions to control access rights for content editors, enhanced content editing tools, enhanced web farm support, web page caching, and online security and performance monitoring tools."
Commercial open source vendor DM Web Corp offers the dotCMS (news, site) web content management system -- a Java-based framework geared towards extensibility and e-commerce. Their community edition is free while their enterprise edition lists for US$ 4,750 per CPU.
Their paying customers get the same features, but in a more robust (lots more QA testing) package. They also get fast access to patches and fast turn around times on support tickets, among other "enterprise" benefits.
Paid Support + Services
But not every company making money with open source takes this route. For example, Cheryl McKinnon, Chief Marketing Officer with Nuxeo (news, site), points out that, "Unlike a growing number of commercial open source vendors, we do not have two separate software packages or licenses." Instead, she says that, "Our Enterprise CMS platform and related applications, Nuxeo DM and Nuxeo DAM are available under LGPL, with no license cost."
Their model instead revolves around paid support when customers need to deploy the application, and on offering applications built on top of the free solutions. Nuxeo has also begun to bundle some SaaS tools with their enterprise support model, making it more of a hybrid services plus software offering. This is an approach we expect to see more of.
Commercially Packaged Knowledge and Training
The Umbraco CMS (news, site) project team have built a profitable model in part by monetizing the knowledge around their web content management platform. Umbraco.tv is a video-based training website that costs something like US$ 15-25 per person per month for access.