How to Make Money by Monetizing Open-source Software
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How to Make Money by Monetizing Open-source Software

How to Make Money by Monetizing Open-source Software

In the contemporary world, open-source software is present everywhere. At Paircode.dev, we’re developers ourselves and we know how unusual it is to undertake a project and not take into consideration the various open-source software components.

Open-source software is computer software that is distributed under a license where the copyright holder permits the users to use, explore, change and enhance it.

The design of the software is publicly accessible rather than exclusively controlled by an individual or group of people as in the case of closed software. You’ll probably have used open-source software previously without knowing it and many of your projects may even depend on the developers behind it.

Chances are you’ve spent a lot of time and energy designing this software so you don’t want to miss out on the opportunity to monetize your project.

In this article, we’ll explain the various ways of monetizing open-source software so you can reap the rewards of your work.

Can open-source software be monetized?

Most people think of open-source software (OSS) as a free service. It is indeed a fact that this software was free for a long time. However, today it is feasible to earn money from open-source software projects.

Recently, developers have started speculating about ways to monetize their OSS projects. We have curated a list of five sources or routes through which you can earn money from your OSS development.

1. Paid support

Delivering paid support is one of the simplest ways to secure revenue through OSS projects. As the maintainer of your project, you need to acquire the highest level of command over the codebase. This will equip you with the potential to extend your support services to the firms interested in utilizing your software.

Red Hat is a classic example of a company profiting from an open-source subscription model, becoming the first billion-dollar open-source company in 2012. It sells a yearly subscription to users with technical support. The subscription plans differ based on the number of requests, support channels, and other features.

Although it takes more hours of manual work, it provides an enhanced user experience due to the fact that customers don’t have to learn the software themselves, which is a great selling point for the paid support model.

2. Software as a Service (SaaS model)

Another way to monetize your OSS project is by using the SaaS business model. This model is preferred when your software is fully developed and has the ability to stir up demand in the market.

Developers can select to host the software themselves but it is more convenient and economical to pay for an externally hosted solution. This also helps you avoid the headache of looking after both security and maintenance.

If you go for a hosted solution, you’ll have to pay a monthly sum but it will give you more time to concentrate on the application itself.

The OSS community will be more than happy to share recommendations for quality open source applications.

3. Open-core model

Coined by Andrew Lamppitt in 2008, open-core is a business model that is adopted for the monetization of open-source software. In this model, the core version of a product is offered as Free and Open Source Software (FOSS) where people are freely licensed to use, explore, and modify the software while licensing commercial versions or add-ons as proprietary software.

Hence, developers have the liberty to use the software in other open-source projects. Most of the open-source products work by charging for services that are required by a larger market.

However, keep in mind that it is not as simple to opt for the open-core model. The design and set-up of your open-source software should be refined to meet the requirements of this model. It is rather difficult to segregate proprietary elements from the code base into packages.

4. GitHub Sponsors

In 2019, GitHub launched GitHub Sponsors to financially support developers from around the world who design open-source software.

GitHub, mentioning the importance of open source in modern-day technology, explains, “The world runs on open source. None of it would be possible without the global team of maintainers, designers, programmers, researchers, teachers, writers, leaders—and more—who devote themselves to pushing technology forward. These extraordinary developers can now receive funding from the community that depends on their work, seamlessly through their GitHub profiles”

The key advantage of choosing GitHub is that it charges zero platform fees from the developers. 100% of the sponsorship funds belong to the developers. The sponsors at GitHub also extend their support to those who design and maintain the OSS.

5. Paid feature requests

If you have a smaller project, it can be more difficult to monetize your open-source software. You might have other jobs to keep up with so you will have limited time to maintain the project.

If you’re able to find a few firms that are ready to use your project, you can deliver paid feature requests. This means you will create new features as per the request by the company. They will pay you accordingly for developing these features.

Paid feature requests are one of the easiest ways to make money with open source projects as even developers with smaller projects are likely to find a few companies to use their software. These companies prefer freelancers as it is cheaper for them to hire those who have developed the codebase and won't have to spend much of their time formulating the functionality required.

Why don't all developers monetize their code?

Not all developers are able to monetize their products. The amount of money you can earn by monetizing your codebase depends on several factors. Initially, the popularity of the software is an essential aspect that determines its monetary value. Apart from that, reliability and backing are other features that can influence your ability to monetize your code.

You can show reliability in various ways, for instance, the time you take to tackle issues or how often you maintain the code. It is highly unlikely that an unmaintained code will be able to obtain the user's backing and support.

Another instance of not being able to use your software for commercial purposes is licensing. For example, with the GPL license, redistribution and modification of open-source software become easy for the end-users but at the same time, you cannot ingrain your OSS solution into proprietary software and earn through a GPL license.

This is exactly why you need a commercial version of your product to be able to monetize it, which is available in the case of dual licensing.

Can you sell open-source software?

Yes, it is possible to use open-source software for commercial purposes. However, it is important to note that commercial is not the same as proprietary.

If you obtain the software licensed under open source, there is no problem in using it for commercial purposes. Nevertheless, it doesn't mean that you can place constraints on people who received the software from you.

Summary

Open source projects may start as a fun activity or hobby but there often comes a time when you realise their potential. There are lots of ways you can monetize open-source software as we mentioned above but your decision will depend on personal factors and what the code has been built to do.

Websites like Paircode.dev can help you to find and collaborate with like-minded developers. Maybe your Paircode.dev collaboration will result in the next billion-dollar open-source company!

Get started today.

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