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Open-Source Business Model

publish date: 2026/06/13 03:24:45.098009 UTC

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Many software product companies now use an open-source approach to development. What is the typical business model for such companies?

The company earns revenue by selling the source code itself, with different pricing tiers for different features

The company uses an open-source approach purely to recruit volunteers and then closes the source code once the product is mature

The company releases the source code only to verified enterprise customers who sign non-disclosure agreements

The company releases the source code and earns revenue by selling support services, add-on services, and cloud-based versions of their software - not reliant on selling the software product itself

Correct Answer

The company releases the source code and earns revenue by selling support services, add-on services, and cloud-based versions of their software - not reliant on selling the software product itself

Explanation

Many software product companies using open-source development have a business model not reliant on selling a software product. Instead, they sell support services, advice, and cloud-based software services associated with the open-source product. They believe involving the open-source community allows software to be developed more cheaply and quickly and creates a community of users for the software.

Reference

Software Engineering, Ian Sommerville, 10th edition

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