Earning Money with Open Source Software?

An anonymous reader writes "I've been working on a financial application which I've decided to release to the public. I want to make some money from the application, though I certainly don't expect to become a millionaire. The problem is that I'd like nothing better than to open-source it. There are many aspects of the application that I don't have time to refine, and other developers could definitely improve upon my work. However, I don't know how I earn money from something once I've made it open source. How have you dealt with trying to turn a reasonable profit on your work while remaining open-sourced?"

Are you new here?

[jawtheshark]

FSF view on selling software [gnu.org]

Also: Software as a service

Finally, there is also consultancy for your own project. You need help installing it? You want a feature? Hand over the cash!

No, I haven't done it. Mainly because I'd rather not be my own boss. The payoff is high, but so are the risks. I'd rather be a wage-slave and let my boss bear the risks.

In short, you don't earn money, you get hired.

[ehack]

I think that OSS doesn't make money as software for an individual, but it allows him or her to increase his or her visibility.

Learn from thes one who have succeeded

[ccguy]

Learn from the ones that have succeeded, such as mysql or zend.

I'd suggest you start a company, as you are more likely to be taken seriously by possible clients. And become 'the' company to go for support, customization, etc.
There must be products who have succeeded as a one man show but honestly I can't think of any.

Also, drop the 'I don't have time to refine' attitude. If you want to make money, you have time to do whatever your clients require, unless you just feel it's wrong for your product and refuse to do it altogether.

In short, if you really want to make money, your priorities have to be the ones of your clients', unless you are confident that what you feel like doing today is what someone else will feel like buying tomorrow.

By the way, is anyone using it already?

bad idea

[ILuvRamen]

If you want to make money on it and you're the only person who worked on it, don't make it open source. Just release it for free and take donations but don't release the source. Open source implies you're going to let other people work on your code and that doesn't sound like what you want to do. Sounds like you'd just be abusing the overused term "Open Source" just because it's free and get all pissed when people e-mail you problems with your code that need to be fixed.

You've said it yourself.

[k.a.f.]

I want to make some money from the application, though I
certainly don't expect to become a millionaire. The problem is that
I'd like nothing better than to open-source it. There are many
aspects of the application that I don't have time to refine, and
other developers could definitely improve upon my work.

Wow, blatant self-contradiction within three sentences! If the application
makes you money, then by definition, you can afford some time to work on it.

Ensure there is a demand for your software!

[Yahma]

I'm the author of LiarLiar [sf.net], an open source Voice Stress detector. Over the years, I've had several offers from various individuals and companies to further develop or improve upon the software. If you develop software that has enough demand, you may be able to offer support services for your software. Don't expect to get rich, or even be able to make a living for that matter.

The most important thing to keep in mind is, make sure you have a backup source of income. Either a job or something else, as it is unlikely that you will be able to make enough supporting an open source project, unless it becomes very popular.

Re:Keep a closed-source version

[RoceKiller]

This just causes one problem. What if another developer chooses to improve the open-source version, then you can not use that improvement in your closed-source version as the developer has the copyright over the improvement code.
And what if it was a bug-fix and not an improvement, would you then have to keep the bug in the closed-source version?

OSS or not nearly matters squat. Marketing is key.

[Qbertino]

Wether your software is OSS or not hardly matters anything - unless it's a small desktop app or something. Marketing otoh is key. If your software is ready for market and you have a working developement pipeline up and running be sure to prepare professional branding of your software and it's future community before hand. All successfull OSS projects have solid marketing, good looking websites and are generally attractive to work with and give money to. I'd also not underestimate donations and sponsorships.

Re:Are you new here?

[ShieldW0lf]

Free software is by and for people who are scratching their own itch.

Your question could be reduced to "I've invented a new hammer that works much better than old ones, but anyone can make a hammer just like it. How am I going to make money off my hammer?"

The answer is simple. USE your new hammer to build things instead of calling a halt to your problem solving career and trying to open a hammer store.

Sell to people who want to buy

[OSPolicy]

You sell OSS the same way you sell to anyone else: you sell to people who want to buy because they value what you offer.

There's not necessarily a lot of overlap between people who need financial software and people who know how to build and validate software that they downloaded from the net. Those people value software that works out-of-the-box. Give it to them and charge them for it. There's also not a lot of overlap between people who treat their money as if it were important and people who entrust their financial data to an unknown app from a provider they can't identify. So be the known, trusted source for a known, documented app and charge people for it.

Be sure to make it possible for people to do what you want them to do. If you're going to make it open source with the idea that others will pick it up and make improvements, thoroughly document what's there, how to build it, how to give changes back, how those changes will be moderated, what you'll do when two people submit conflicting changes, and all of the other stuff that's required for an ongoing open source project to which people will contribute.

By the way, there's a lot of open source out there, but not nearly as many open source developers. If you've got an app in which you yourself are no longer interested, you don't necessarily have the next million-developer piece of software sitting on your disk. No disrespect intended; I'm just saying that you may want to do a reality check before you get too far into this.

Re:Are you new here?

[riseoftheindividual]

Some other possibilities to add to those:

Produce a printed manual sell it from the main site.

Produce a lightweight but useful book and go into the software from more of a practical application standpoint than your standard manual/documentation, and sell it either dead tree or ebook format on the main site.

Ads on the main site.

Get a nice catchy logo for your project and arrange to sell logo'd tees, coffee mugs, etc... on your site. There are sites out there that will let you do this with little to no capital up front.

This one will be controversial here, but hey futz it... talk to some Indian support firms and see about possibly hiring them to offer support, which you then sell from the main site of the application, where you will serve as "level 2" tech support.

Most important of all, if you decide to do any of this, just freaking do it. Don't second guess yourself once you've decided. Move forward in total confidence, daily feeling/envisioning your goals attained.

Re:bad idea

[jareth-0205]

Errr... isn't that kindof ignoring the point of open sourcing something? So that customers can have some sort of control and assurance that they will be able to use and modify the program in years to come (when the submitter has lost interest)? So that future generations can use and modify it?

Sell Windows/Mac binaries, or Sell the Interface

[steve_thatguy]

This is actually exactly what I was going to suggest. People running Linux are often either programmers themselves or interested in free/open source software. People running Mac OS and Windows, however, are obviously willing to trade money for the convenience of a point-and-click installer.

There's another option depending on how well you've defined a core/UI split--open-source the core engine, but charge for the GUI (or possibly for a web interface).

Three reasons to open-source

[apankrat]

There are three core reasons to open-source -

* to solicit improvements (see Linux)
* to facilitate adoption (through implementation transparency, see OpenVPN and TrueCrypt)
* for personal reasons (to brag or to support political agenda, see libevent or IO language)

These can be mixed and matched, but it typically helps to understand WHY you are open-sourcing. That's a first step.

Second step, if you want to make some $, is determining (funny enough) your business model. You can make money off the open-source either via the support or via dual-licensing.

Support model does not really scale, because in order to earn twice the money, you have put a double effort. It is also more of a sales task, which you may or may not have an inclination or an ability to so.

Dual-licensing *is* a way to go, but it implies that the code is non-trivial, solid and mature. Otherwise it does not make any sense for a 3rf party to become dependent on something that's not quite ready with an uncertain future. This automatically implies that you should not be open-sourcing the code that needs work.

Keep in mind that it's often possible to find someone willing to purchase the project as is from you. Depending on the arrangement you may also retain a right to influence further development of the product and/or land a mid-term contract gig.

2c

Re:Sell the .EXE files

[homer_s]

However, charge for the Windows binaries/installer. Most Windows users will pay $20 rather than have to figure out how to compile it. If they do compile it anyway then their time is worth less than $20 so they could not have afforded it anyway.

But won't someone just compile it and then give the .EXE for free? Some people might still buy it from him since it is the 'official EXE', but many of them would just get the free EXE.

Will It Make Money "Closed Source"?

[nick_davison]

Maybe I'm reading too much in to the phrasing here but I noticed:

There are many aspects of the application that I don't have time to refine, and other developers could definitely improve upon my work. However, I don't know how I earn money from something once I've made it open source.

Is this something that would make money on its own, with the time that's being put in to it?

Or is it at the point where it's essentially a "nice idea" that's been taken to about typical shareware quality? Something that's not even close to standing on its own as a traditional boxed product, revenue generator without a lot more development work put in by a lot more people?... People that the goal is to get for free from the Open Source movement rather than actually hire?

Back during the dotcom days, I'd get approached daily by someone new from sales or marketting within the large multi-national I was at. They heard I was a good coder and they wanted to know if I'd be willing to join their start up as the lead coder.

I'd check their business model. They always planned the same thing: Who's paying for this? "We'll get VC interest." OK, what idea do you have? "We'll find someone with a cool idea and fund it with that VC money." So you're planning on getting VCs to fund you, to do the VCs' job, with you then taking the millions dotcoms are supposed to make their owners? I don't see this working. At that point, I always politely declined.

Just as I questioned their entitlement to make money and, on a less manipulative level, their simply having deluded themselves... I'd question anyone who doesn't really have a fully featured product, that's not at a point where it can make money on its own, without needing Open Source devs to take it to the next level for them - work they won't pay for because it's "open source" but they'd still like a reasonable profit from for themselves.

Re:Simple - You don't (directly)

[TheRaven64]

Exactly right. The off-the-shelf commercial software and Free Software are diametrically opposed. This is why Microsoft is threatened by Free Software, but IBM is not. People don't pay money for Free Software, they pay for people to write Free Software.

Without knowing more about this program, I can't give very specific advice since the best exploitation route depends a lot on the target market. Talking to other people who write financial applications, I've been told it's a great market to be in because the government changes the rules every year and so there is always a demand for new versions. This being the case, you could possibly sell a service for people getting early access to the new rule-sets for this year's rules.

Selling support is a popular way of making money from Free Software, but remember that support in this context does not mean telling people how to install and use it (that's what documentation is for), it means being willing to modify the software to create something that exactly matches the needs of the customer. Free Software gives you an advantage over other consultants doing this because you already have a program that you know well that does 90% of what the customer wants, so you only have to add the remaining 10%, while your competitors might have to start from scratch. And, of course, you only need to make the changes once and can then use the modified version as the starting point for the next customer.

Pre-paid

[Per Abrahamsen]

The trick is to get paid, or enter a contract to be paid, before you do the work. People need some functionality, and you write it for a price. As a byproduct, you release the code as free software. It gets easier over time, as you and your code gains reputation.

I have made a living that way for the last 12 years.

It is a change of mindset, you get paid for your work, not for your code, just like if you were an ordinary wage slave. The difference is that since your code is free, you are too, you won't lose it when switching client.

Pretty well covered...

[kgwagner]

There's a lot of insightful information here already, so I'll just add a bit and reinforce some... There's nothing in the GPL (any version) that says you can't charge for your software. Whether people will pay is another story, since they don't have to. But, many people don't want to compile or jump through hoops installing, or even downloading the software in the first place. So, one way to start is to just offer the disks for sale. Almost anybody will pop $5 for a pre-burned disk with a reliable install routine on it. Since CDs cost about 25 cents apiece, and take about 5 minutes to burn, and cost about 50 cents to ship, you're still $4.25 up not counting your labor. If you find you're selling a lot of them, you can always hire a fulfillment service. That'll drop your per-unit sales profits a bit, but it takes workload off you so all you're doing is collecting checks. Adding the project to Sourceforge is a good way to get help, if you haven't the time, inclination, or wherewithal to put the finishing touches on it. There's no money in that, but it improves the product and its uptake. Support is a good way to make money, but if you don't have the time or resources for that, then you may not want to put it out there at all. Besides, outside of corporate users, paying for support sounds like crime to most people

Don't forget, is not a metter of philosophy

[pressdocebo]

Hi, I own since 4 years an Open Source company called Docebo (www.docebo.com), we offer an e-learning platform developed by us but released under GPL because we don't want that the customer pay for every student and we also want that the customer own all the software, data, code and course without being "linked" to us. We are based in Italy We have as customer italian Branch of SKY Television, AON Insurance and many other companies that generally have more than 50 Milion U$ or more than 500 Employees, next challenge will be market our services worldwide. Your problem is not a "software" problem but business problem, your problem will not be develop a software but find customers, you will not be a developer but you will be a manager. More verticalized is your product more money you can do, more services you will find more business meeting you will have ... Regards Claudio

Re:Value Earned is Experience & Recognition, N

[sticks_us]

These comments remind me of some of the things said in another slashdot article [slashdot.org] on recognizing good programmers.

I hired a dude a couple of years ago who, like you, didn't have a lot of experience.

He did, however, have a very impressive FOSS portfolio, and could show all kinds of code he wrote in support of various projects. This involvement suggested that:

0) He cared enough, as a developer, to get involved and donate his time and effort to a project, and
1) He saw his contribution as one to the "greater good" (and not entirely for personal gain), and
2) He had the stones to put his code out there for others to review and use.

YMMV, of course--this fellow got the job, and has done quite well at it.

Re:Sell the .EXE files

[Marcion]

won't someone just compile it and then give the .EXE for free?

Sure they will, however those willing to pay $20 will never find it. Time == Money.

Re:Are you new here?

[thejam]

The answer is simple. USE your new hammer to build things instead of calling a halt to your problem solving career and trying to open a hammer store.

Are not these "things" to be built with this hammer themselves potentially hammers for still other things? Re-applying your argument, potential-hammers shouldn't generate revenue either (or at least their potential hammerness should not generate revenue). So it's primarily the things one makes that aren't themselves useful (by having a hammerness property) that generate revunue, i.e., one should be paid to create useless things!

Gotta admit that's a pretty fair assessment of the appeal of most consumer goods.

Stand the problem on it's head.

[domatic]

How would you make money with this as a purely closed source app? To make money as a closed source app, it has to have some polish and depth of functionality out of the box. You'll have to put it into it precisely what you say there isn't time or energy for. Implicit in making it a FOSS app is the hope that others will supply some of that time or energy but you have to trade off at least some of the personal exclusivity you could enjoy if you keep it proprietary.

If you go some sort of FOSS route then is there any data this applications depends on to run. Financial apps in many domains have to be aware of tax rates or some sort of other specific data that has to be compiled for it to be useful. Compiling that data and keeping it current is at least as big a job as writing the code. If your app is in that category, then I suggest opening the code and charging for the domain specific data it needs to be useful.

Re:Are you new here?

[ShieldW0lf]

You get enticed to solve problems, not invent tools. Money is enticement.

If you can't find a single person out there who has a problem that needs solving and involves your new tool, your new tool is useless.

A tool is a means to achieve a goal, not a goal in itself. If there is no goal at the end of the train, then yes, your whole pyramid is built of meaningless crap.

Being that this is finances he's talking about, all of it is meaningless. The value of financial software is in how close to zero you can bring the time you spend working on it, because it's all administrative overhead and no productivity whatsoever.

Financial stuff gets stale fast as laws change, so I might suggest something along the lines of:

1) Give it away, and sell its advantages strongly far and wide
2) Make it update itself to the suit the latest legal/financial environment from central servers with new data, but only for paying customers
3) Create a business model around being "The guys who watch the laws and make sure our software still suits them."

In other words, don't trap them, empower them, and make money dealing with the ongoing bullshit that's closer to your skill set than their own.

Re:bad idea

[sumdumass]

There is nothing preventing him from giving customers the source under different licensing options.

I have a client who was on the receiving end of this for a collaboration and time tracking software suit. It ended up costing them about 10 times the normal software costs and they had to allow audits of any software that they resold but this company didn't sell software. They needed the source to develop integration with other software that was made for them years ago but were still using. In all, it worked out pretty good but it was expensive and the license doesn't allow them to use the code in commercial applications they create, only in the context of getting the original software to work with the applications.

I have a feeling though, this brush with open source is because there are elements he thinks others could improve better then he could. Not as much as wanting the client to have the code or anyone else to have the ability to use it. I think going with an open source on part of the code and asking for rights assignments from contributors that would allow use with propriatary applications could work. In that situation, he could have a separately named product with professional support and documentation and an open source project of the same things the might not be as polished as the real deal.

I was surprised to see how much polish and refinements are on some of the Pay versions of Open source software. It almost does the Pay version injustice having the free and open version associated with them. I mean consider red hat's renaming which got around this little issue. Now instead of Redhat enterprise linux and red hat linux, you have Fedora which in name separates bugs and nuances and stuff from the RHEL software. It allows the professional versions to be sold without the negatives of people not knowing what they are doing and blaming something that shouldn't be blamed or talking down the pay offerings based on their experience with the often bleeding edge free offerings.

Customisation

[vandan]

If your open-source project gets you some cred, you should easily be able to find work doing customisations for businesses. There are usually far more people who would like to use your software than the number of people who are capable of installing and setting it up. Works for me anyway.

Re:Sell the .EXE files

[YrWrstNtmr]

However, charge for the Windows binaries/installer. Most Windows users will pay $20 rather than have to figure out how to compile it.

For a financial app, presumably something to run my company on, $20 is laughable. I'd rather a free open source supported app, or a hugely expensive supported app than some BS in the middle for $20. Seriously.

For a minor plugin for Paintshop Pro or Photoshop, $20 is fine. For the life and reputation of my company, $20 feels like you don't think highly enough of your own product. Could be wrong, but that's what it feels like.

But if you charge more, it damn well better be good and complete. And updated. And accurate. And legal.
Things that show where the juxtaposition of financials and open source fall down.

Software will NOT make you money, fame will do

[wikinerd]

No software is ever going to make you money, closed-source, open-source, or free. What makes you money is your *contribution* to the economy, ie the value you create, and your *reputation*, *popularity*, or *fame*. So the recipe for success is: Build something people want (value) and gain popularity and reputation for your contribution. If you have some popularity and reputation it's then not that hard to make some money by selling services, minor products associated with your contribution, etc. Focus on popularity and getting as famous as you can. And the best way to do that is to build something people want and give it away for free. Afterwards, when people start using it, it's easy to start offering other associated services and products for a fee.

Re:Are you new here?

[Anonymous Coward]

You can't make money out of OSS, so don't try. If you want to earn a living, sell the stuff to the highest bidder. If you want to earn glory, OS it.

Re:Are you new here?

[vrmlguy]

The key is the utility of the software, not its price. If something provides an advantage over their competition, your customer won't be inclined to give it away. In fact, most customers aren't interested in getting involved in the even minor requirements imposed by the GPL, i.e. making the source available to whomever they sell it to, so they won't be interested in distributing it at all; in their view, the cost of doing so exceeds the benefits. And don't forget that you've only sold the source to the company, not its employees. If someone uploads your code to Sourceforge, they're not only guilty of GPL violations, they've also stolen property from their employer.

Re:Are you new here?

[tixxit]

In the situation you are describing, the only benefit that the software has, as open source, is that some company (probably not a software company) can try to maintain the software after you give up on it.

And of course, from the question:

There are many aspects of the application that I don't have time to refine, and other developers could definitely improve upon my work.

That wouldn't likely happen if most interested developers can't get the software/source.

Re:Are you new here?

[innerweb]

I'd rather be a wage-slave and let my boss bear the risks.

I have always loved that illusion. What do you think happens to the people who work for a company that tanks (think Enron, Xerox, Auto-Manufacturers)? Their jobs and financial futures are not guaranteed. The truth is that we all shoulder some of the risk. The people at the top do not necessarily have more risk (and in fact most often, they have less).

InnerWeb