Business model Quote by Stephen O’Grady
““So if open source is cannibalizing the commercial software markets, it’s all smooth sailing for those who commercialize open source, right? Well, not exactly. In order to monetize an otherwise free and open source software product, vendors have been forced to develop creative new business models to get buyers to pay for what they can otherwise get for free. The most common of these are described below. Support/service The most common model of commercial open source is support and service. Instead of paying for the product, buyers pay vendors to support a product they can otherwise obtain at no cost. The advantage of this model is that most large organizations require commercial support for production applications, so sales is less of a challenge. The disadvantage of this services-only approach is that the deal size is commensurately lower than with traditional commercial software that includes both a license component and support and service.””
About This Quote
Source Article: Open Source Business Models, 2015
Open source forces vendors to sell services rather than licenses, making revenue harder to capture.
In simple terms: Open source shifts profit to support services.
Key Takeaway
Focus on high‑value support.
Themes
business models
open source
revenue
services
software
Mood
analytical
pragmatic
Type
explanatory
industry
When to use this quote
- Enterprise IT
- startup funding
- software procurement
- IT consulting
Key Concepts
Monetization
value proposition
customer dependency
Questions to Reflect On
- How can open source companies increase deal size?
- What non‑service revenue streams are viable?
A Different Perspective
Service‑only models limit profit margins compared to licensing.
