Open Source Does Not Win by Being Cheaper

Open-source projects—not just commercial open source—have served as a critical driver for the improvement of products for decades. However, some software is going to remain closed source. It’s just the nature of first-mover advantage. But when transparency and extensibility are an issue, an open-source successor becomes a real threat.

Catering to the price-conscious is a losing battle.

But why make this point? Well, splitting the hair between profit and usage is important to measuring long-term success. If a project gets great adoption but cannot drive revenue, it will die. Some wishful thinking might argue that the community will take over, but there’s been little evidence to indicate this happens.

One of the big benefits of open source is that it opens the development of niche features to the community. While the core product is typically maintained by a central engineering team, integrations or plugins are often built by community developers and then occasionally merged into the main branch.

What about larger companies? With some caveats, larger companies aren’t worried about going out of business because their Amplitude is too expensive. They might be price-conscious in terms of negotiating a contract in context of their budget, but most SaaS software is just a line item at the end of the day. What matters more is that the solution is... See more

The caveat is if the solution is a massive cost on the overall budget, then a corporation may seek out a more price-friendly solution; there are plenty of companies that needed to kick Oracle when their database costs skyrocketed due to usage. But most open-source solutions aren’t replacing a top-three line item, and therefore price isn’t the north... See more

Even if the most privacy-conscious technique is to self-host the open-source solution (which often leads to no revenue for the developer), many companies will still opt for a hosted model. But they do so now with assurances of how the software works—line by line—and the process of migrating to a self-hosted model in the future if necessary. It’s no... See more

A great case for an open-source solution is when a transparency problem is present. What is a transparency problem? It’s when a solution being closed source creates distrust between the client and vendor.