Ask HN: Open source or closed source (business model)?

[masbicudo]

I and a collaborator have started a project with components and infrastructure to build line-of-business applications using ReactJS and .Net. We have planned to make it open source in a first moment and try to sell support and other services. We are working on this project for two months, and we realized that it will be a lot more work than we thought. Now we are not sure whether we should be creating a company with paid components and services (yet another one =), or if we should continue with the open source idea, and charge only for offered services.

In the open source argumentation side, if the project succeeds, then we may have additional contributions from other developers world wide. But, is that a real pro? For a line-of-business project? Who's going to contribute since the target audience is generally companies instead of individuals? Another pro is that we may have more visibility, maybe faster than if we made it closed source.

In the closed source side, there is the pro of making it more profitable... but maybe this is just a misconception? That's the question. Is it easy to sell components these days, or is it easier to sell services only, and not worry about payd license?

This is the project repo: https://github.com/gearz-lab

What business model do you recommend us? Advices are very very welcome! And I'll be greatful forever =D

Thanks!

[RandomBK]

Have you considered a hybrid of the two models? Have an open source framework, but build and sell closed source components?

I tend to find that business customers require a mixture of generic services and custom software. You can offer a basic set of functionality as open source, but sell customization or niche components.

[masbicudo → RandomBK]

I was thinking on making it all GPL, and sell services/support, so that enterprises could use it internally or externally on GPLed software, but when they needed to build closed source external software, they'd buy a license.

There is a problem with GPL though: we cannot sell licenses if we merge in other contributors code, because we wouldn't have the copyright to license that under another license other than GPL. That wouldn't be a problem if we never accept contributions.

We could also sell support, consulting, build up entire software solutions... the problem then is time. At this moment there is only me and a friend in the project.

[joshAg]

I would go freemium. Make the base app open-source and free (as in freedom, though you could also make it free as in beer, too).

You could do something wonky with your license where it's free or nearly so for noncommercial use and then scale up the licensing costs by some metric for commercial use.

Or you could go the normal freemium model and determine via beta customers what businesses will actually pay for and then charge to do that well. I'd pick this option.

Realistically though, if it's the type of product that only enterprise will ever be interested in, then the discussion is mostly moot.

[masbicudo → joshAg]

Our focus is in enterprise solutions for now... but it could interest individuals building web applications.

We also thought that a good option would be to make it all open source, and build our own applications with that. These applications would be our source of income, instead of the core framework and components.

[syllogism]

I thought about this a lot for my project, a suite of NLP tools.

I decided to go for a dual license. You can use the project under the Affero GPL, or you can buy a commercial license for a fee. The idea is that the GPL'ed version would be unattractive to many companies, and the fee is small.

I still have people interested in contributing to the project, even though they have to sign a contributor's agreement that allows me to license their contributions outside the AGPL.

[kendalk]

You might want to read this thread on HN before you decide:

"I am done with the freemium business model"

https://news.ycombinator.com/item?id=3416108

[masbicudo → kendalk]

Hmm... it seems to me that's a specific of that kind of business. But it's good to know about these failures, and their circumstances.

Great thread. Thanks!

[biomimic]

I'd give serious thought to these two articles:

"Hey, software makers: Skip the sales team. Go freemium to build a $1B business"

http://venturebeat.com/2014/09/10/hey-software-makers-skip-t...

And... http://www.businessinsider.com/the-incredible-story-of-zenef...

[masbicudo → biomimic]

My god!!! I've always been a big fan of Attlassian... but I could never imagine it was a $3bi business. That's a powerful example. Thanks!

[paulhauggis]

Selling support is difficult to scale. Especially with only one or two people on your team. The only real way for it to work at this level is if it's support through email only (or you will have angry customers and lose them fast).

It would be better to sell a proprietary app, build up some capital and then hire a team to scale the support of your OSS side of things.

[masbicudo → paulhauggis]

We thought about using the framework and components to make an app and sell that instead. The only downside is that we'd have to focus on two things now: the open source core framework and components, and the proprietary app. On the other hand, what you said makes sense, maybe an app is a better starting point in terms of strategy. We'd have to think what kind of app we could build too... these decisions are giving me a lot of headaches (in the literal meaning of it).