Re:yes, yes but what about Professional OpenSource
Posted by: Anonymous Coward
on May 13, 2003 04:00 AM
Whether you want to sell licenses or service, you're not going to be able to pay your programmers without ongoing service or product availability. The cash for whatever your business is has to come from somewhere. If you're a start-up, either you're going to have to front the money yourself, or get a bank or venture capitalist to support your goal.
Assuming you've not procurred funding, you're at the mercy of nearly anything to build capital to build what you want to sell, so if you market Accessories and hype, that is potential income that you don't have during start-up development stage. If you can sell licenses for Closed Source product, then that's your market. You have to determine what your product's market is and how you wish to provide support. If your product is a niche product, then focusing on service, customizations, and modifications to the product would be a key factor. If it's a general purpose util, perhaps you would be more interested in licensing. One thing you could be sure of: a license doesn't necessarily keep a customer loyal. Good customer relations and service will keep a customer loyal, and that may be more valuable than a license anyway. If you are good friends with your customer, you make a stronger bond based upon loyalty and trust that may be able to withstand pricing and competition.
People are very fickle. But they still have the same desires: fulfill their needs, feed their egos, make them feel important.
As for loss leader: Sun has OpenOffice and StarOffice. Both are very capable suites, but service and support are (suggested to be) higher quality and availabilty in StarOffice. StarOffice is closed source, and because it's set for (arguably) even more stabilty than OpenOffice, it is counting home users who have OpenOffice to ask their employers to license StarOffice.
Generally speaking, it makes sense to have the proliferation of a *base* product into the hands of as many people as possible, and charge for changes, add-ons, and support.
A real start-up needs to be sure of a source of income, to be sure. If it's your business model to charge for licenses, you run the risk of fewer license purchases and more potential piracy. Also, you run the (possible) risk of less acceptance because of initial startup costs.
On the other hand, if your business model is primarily value-add and/or service/support oriented, your overhead can potentially be greatly reduced, and your income can be almost pure profit (and in some states, not taxable).
I think the main idea is that unless you get your software into the hands of users, you won't see any money anyway.