Actually, you can even make more money with Open Source than what you could make in an average well-paid Silicon Valley job.
That’s no exaggeration or any hypothetical. Its as real as it gets with numbers, with actual people and small businesses to prove it.
In the past two decades, Open Source has become an immense ecosystem which empowers its participants and liberates them from their constraints in all respects – not only from proprietary, controlled platforms but also especially financially.
Let’s examine how big has Open Source become first, and then look into how people are making money in a sharing economy.
A wide, wide world
Today, Open Source now has many business models to make money and develop in sustainable fashion. You are not obliged to await donations anymore. One of the many Open Source business models will surely fit your application and your future vision about your business.
To top that, the Open Source ecosystem is now huge. It became so huge that its not far off to say that it is practically the entirety of Internet. From server infrastructure to application space, Open Source has become the new norm of I.T.
The choice for OS for servers is today Linux. Not only tech giants like Google run their applications on Linux server farms, but also Linux is de facto OS practically in all datacenters/hosting corporations which provide Internet space to end-users. You will be hard pressed to find a IIS host today.
Linux has even gotten into devices – leave aside handheld devices in which Linux based OSes became ubiquitous – Linux is being used in many more places ranging from Smart TVs to Home Routers as well.
What’s even more stunning, an entire ~80% of Websites/applications on Internet run on Open Source PHP, ~20% of all websites on Internet are on WordPress, and ~20% of Ecommerce websites are built with one single plugin for WordPress, WooCommerce. WordPress uses GPLv3, which is even more hardcore copyleft than GPL.
Real people making real money in a huge ecosystem
Even without talking about the Ecommerce/Business conducted on WordPress platform, solely the WordPress ecosystem of Themes, Plugins, Services sports over $1 billion dollar market by itself.
Together with Themes, it becomes a massive ecosystem:
And this is actual cold hard cash – not valuations or estimates, with no investors, no financial schemes. And majority of those who are making money are single programmers, working alone solely on WordPress:
Pippin Williams, a lone programmer who just recently took on a few team members, made over $700,000 in revenue in 2014. Majority of this money is profit, and it is cold hard cash. A year earlier he broke the $300,000 revenue mark alone. And he did that with only 50,000 active installations of his plugin, Easy Digital Downloads.;
Small software corporations which produce WordPress themes are making multi-million dollars every year.
Whereas WPMU Dev, as a major Plugin development company, is on par.
As easily demonstrated above, Open Source is doing whoop-ass amounts of cash for its developers, and users are quite, quite happy. No programmer in no institution can imagine what Pippin did, by single handedly reaching $700,000 in revenues from tens of thousands of direct-user customers and have a thriving software business – not in Google, not anywhere in Silicon Valley, not in Academia. Yeah, if you are very lucky, you may come up with a ground-breaking piece of software and then get some investors to pay you some good hard cash, but as what you can understand from the trend in current venture capital business, it will either take ~10 years to get there, if you ever get there at all. You won’t get there working for Apple, for sure. The catch here is that there are many like Pippin, even though not everyone makes $700,000/year.
But how does this work? Which business model?
Taking WordPress as an example, its mainly SaaS, with variations:
You can give away your software free, and charge for premium version and its updates.
Many small WordPress businesses use this format. It works pretty well. Free version is posted on WordPress org, and this ends up being advertising/distribution for free. You get thousands of users, whereas a decent percentage of them convert into Premium users because they want specialized/professional features that are required for their particular activity. The free users create an ecosystem of support and also market the product through word of mouth.
The updates are subscriptions, they are charged generally yearly – so its recurring revenue – not one time sale. The software constantly funds itself.
You can give your software free, and sell addons
Recently this is the most popular – the software is given away free, and many addons exist for specialized purposes. Users customize their installation as they need, allowing them minimum cost and maximum specialized functionality for their purpose. Incidentally the addon revenues become significant – because dozens of addons surpass the value from which you could sell a premium version. And its less bloated as well. You can serve paid and free addons at the same time.
Like Premium version method, the addons are also on a subscription basis, with users paying yearly for updates and new features. Its recurring revenue. This is the method Pippin’s Plugins used with Easy Digital Downloads.
You can give a free plugin which provides a specific SaaS
Like how Automattic’s own Akismet plugin does – the free plugin enables a SaaS service – spam control, accounting, any kind of API, social login – whatever you can imagine.
Naturally it is charged as a subscription, making the revenue recurring.
You will give support service in addition to above
All of the items above will incur support needs. Developers generally provide both community support through forums, and premium priority support. Support revenue becomes considerable – Pippin William’s plugin Easy Digital Downloads sells support subscriptions for $299/year, for example. This is a business oriented plugin, hence the complicated-ness and the high price. But in general in WordPress ecosystem the average support subscription ranges from anywhere in between 1 to 3 months to 1 year, with support price being $45 on average. You can offer $45/month support subscription as well as $45/year support subscription depending on the complexity of your plugin.
Premium services, development
These are no joke either – even with free plugins, a vast range of custom development requests materialize and these can very well supply a small software house with projects for a long time. Surely, for this option to be viable, your plugin needs to be widely used or be a very niche plugin and needs to have a sufficiently complex application. But it happens.
Automattic, the company behind WordPress, provides managed enterprise level WordPress hosting for major names like CNN, Reuters, Forbes, New York Times.
Moreover, WordPress hosting is a specialized hosting area, with the average monthly hosting fee being around $20 to $45 – much higher than average web hosting industry rates. Many plugin developers offer hosted version of their plugin as well.
Donations and Sponsors
This works if you are big project like Linux. For medium projects it can have some impact, but it is mostly nonexistent when it comes to small scale.
Anything else that you can imagine
There are many more Open Source business models than what we examined here.
The spectrum and amount of activity in a large open source ecosystem are massive. Thus, any way to legally make money from anything you can imagine is legitimate. What is not known not practiced today, is discovered as a method tomorrow – just like how free + paid addon model was virtually unknown until a few pioneers applied it to much success. Tomorrow there will be new models discovered, new methods applied. A lively, thriving ecosystem is something that develops, enlarges and maintains itself. While enlarging, it also creates its own sub-spaces and sub-specializations, like how it happened with WordPress security, hosting, theme development, plugin development, site administration and the like.
Open Source is an ever-developing world which constantly creates new opportunities as people who participate create new things.
As demonstrated, there are multiple ways to make a lot of money with Open Source today, and they work pretty well. As the ecosystem grew in the past decade, the amount of jobs or customers did not decline – they increased. More developers enlarge the ecosystem, which makes it easier for more users to enter the ecosystem and do whatever they want in it. Many Open Source applications spawned an expertise area in themselves, moreover they spawned expertise areas inside themselves – WordPress Theme development, WordPress Plugin development, WordPress hosting, Administration are all their own specialties for example. Its the nature of software – as it grows and becomes more complex, it creates worlds inside itself.
Of course, not every Open Source ecosystem is as large as Linux or WordPress. However, innumerable projects exist, which have sizable ecosystems that create considerable revenue for their developers – ranging from shopping cart applications to CMSes. These developers make as much money as they could make working for any corporate behemoth as a wage slave. And their jobs are not on the line at any given moment like a corporate developer who could be laid off at the whim of any exec or any economic downturn. Throughout economic crisis, the Open Source ecosystems stayed mostly untouched – millions of websites offering immense array of services still needed their software and needed them working in good condition.
So, you can make money with Open Source. And good money, at that.