There has been significant growth in the open source software market over the last decade and as popularity continues to grow, the market doesn't appear to be slowing down any time soon. The Open Source community frequently attracts very intelligent, motivated and experienced developers driven by pride, personal curiosity and peer recognition to develop valuable solutions. No matter how much personal satisfaction developers receive from seeing the result of their efforts however, software developers still have to pay the bills and have some money left over to eat. So, how can software that isn’t for sale actually make money?

The Impact of Open Source

Open source software has a major impact on the software industry. It is usually possible to find an open source alternative product from major software vendors, including Adobe (news, site), Microsoft (news ,site), Oracle (news, site) and Symantec (site). Organizations are saving millions of dollars by using open source products. The movement even affects institutions that do not use open source products directly.

Many popular proprietary products contain open source software components or have designs inspired by open source code. Software is considered open source when it is available under a copyright license and generally meets the guidelines in the Open Source Definition (OSD).

Making Money by Giving Away Software

People assume that the primary way to pay for open source projects is to charge for support. Early commercial open-source vendors like MySQL and JBoss were able to earn significant revenue from the support-only business model, but over time the approach is difficult to grow. Corporate customers are generally willing to pay for support, however most consumers are not with only 3 percent of users actually purchasing support subscriptions.

So, what most people assume is wrong. 65 percent of developers make US$ 100 or less annually on their open source projects. Support contracts are not making most developers rich or even paying for their World of Warcraft subscriptions. 


Charitable Giving

Donations are another option for funding open source endeavors.  Many open source projects have an embedded request for donation or suggest an optional fee for software acquisition. NetBSD is an example of a project that has successfully raised funds via donations. For most projects, donations can yield some money, but the revenue will not likely be significant.

Investor sponsorship is another avenue for supporting development. Several notable companies, such as Oracle and IBM, make significant income from proprietary software, fund or sponsor open source projects. This may seem surprising or counter intuitive. Why would a company spend money on something that is likely to have no investment return?  Companies that sponsor open source development often benefit by getting free research and faster, less expensive development of new solutions, features, and ideas. Companies that sit at the center of a successful open source project are reaping the rewards from the work of highly skilled developers, without paying them.

Secret Source of Funding

According to a recent Evans Data report, one of the biggest contributors to open source software may not even be aware they are paying for it. A number of companies are unknowingly supporting open source development by their employees. In fact, 67 percent of developers polled by Evans Data Corp reported that they spend some time developing open source software while at their primary job. This means that some portion of the salary paid to the developer is allocated to work not related to their job.

Image Courtesy of Evans Data Corp.

Making money with open source is not easy. In most cases, the projects are pure labors of love funded by emotion, not currency. However, as projects gain popularity, it is possible to get some return on the invested effort. With planning and applying one or more of the techniques discussed in this article, contributors may be able to propel their projects into the realm of profitability.