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Making Money from Open Source Software: How We Do It?

imageAfter my previous two posts on the topic, it is now time to discuss how we make money from Open Source Software. Before I start, I want to clarify what I’m talking about:

  • RavenDB is a document database.
  • It is about a decade old.
  • The server is released under the AGPL / commercial license.
    • We offer free community / developer licenses without any AGPL hindrance.
  • The RavenDB client APIs are licensed under the MIT license.
  • RavenDB (the product) is created by Hibernating Rhinos (the company).

I created RavenDB because I couldn’t not to. It was an idea that had to go out of my head. I looked up the details, and toward the end of 2008 I started to work on it as a side project. At the time I was involved in five or six active open source projects, just got my NHibernate Profiler product to a stable ground and was turning the idea of getting deeper into databases in my head for a while. So I sat down and wrote some code.

I was just doing some code doodling and it turned into deep design discussion and at some point I was actually starting to actively look for hep building the user interface for a “done” project. That was in late Feb 2010. Somehow, throwing some code at the compiler become over a journey that lasted over a year in which I worked 16+ hours days on this project.

Around Mar 2010 I knew that I had a problem. Continuing as I did before, just writing a lot of code and trying to create an OSS project out of it would eat up all my time (and money). The alternatives were actually making money from RavenDB or stop working on it completely. And I didn’t want to stop working on it.

I decided that I had to make an effort to actually make a product out of this project. And that meant that I had to sit down and plan how I would actually make money from it. I firmly believe that “build it, and they will come” is a nice slogan, but it doesn’t replace planning, strategy and (at least some) luck.

  • I already knew that I couldn’t sustain the project as a labor of love, and donations are not a sustainable way (or indeed, a way) to make money.
  • Sponsorship seemed like it would be unlikely unless I got one of my clients to start using RavenDB and then have them pay me to maintain it. That seemed… unethical, so wasn’t an option.
  • Services / consulting was something that I was already doing quite heavily, and was quite successful at it. But this is a labor intensive way of making money and it would compete directly with the time that it would take to build RavenDB itself.
  • Support is a model I really don’t like, because it put me in a conflict of interest. I take pride in what I do, and I wanted to make something that would be easy to use and not require support.
  • Open Core / N versions back – are models that I don’t like. The open core model often leaves out critical functionality (such as security) and the N versions back mean that you give the users you most want to have the best experience (since that would encourage them to give you money) the worst experience (here are all our bugs that we fixed but won’t give to you yet).

That left us with dual licensing as a way to make money. I chose the AGPL because it was an OSI approved license that isn’t friendly for commercial use, leading most users who want to use it to purchase a commercial license.

So far, this is fairly standard, I believe.

I decided that RavenDB is going to be OSS, but from most other aspects, I’m going to treat it as a commercial product. It had a paid team working on it from the moment it stopped being a proof of concept. It meant that we are intentionally set out to make our money on the license. This, in turn had a lot of implications. Support is defined as a Cost Center in Hibernating Rhinos. In other words, one of the things that we routinely do in Hibernating Rhinos is look at how we can reduce support.

One way of doing that, of course, is not have support, or staff the support team with students or the cheapest off shore option available. Instead, our support staff consists of decided support engineers and the core team that builds RavenDB. This serves several goals. First, it means that when you raise a support issue with us, you get someone who knows what they are doing. Second, it means that the core team is directly exposed (and affected by) the support issues that are raised. I have structured things in this manner explicitly because having an insight into actual deployment and customer behavior means that the team is directly aware of the impact of their work. For example, writing an error message that will explain some issue to the user matters, because it would reduce the time an engineer spends on the phone troubleshooting (not fun) and increases the amount of time they can sling code around (fun).

We had a major update between versions 3.5 and 4.0, taking almost 3 years to finish. The end result was a vastly improved performance, the ability to run on multiple platforms and a whole host of other cool stuff. But the driving force behind it all? We had to make a significant change to our architecture in order for us to reduce the support burden. It worked, and the need for support went down by over 80%.

Treating RavenDB as a commercial product from the get go, even though it had an OSS license, meant that we focused on a lot of the stuff that is mostly boring. Anything from docs, setup and smoothing out all the bumps in the road, etc. The AGPL was there as a way to have your cake and eat it too. Be an OSS project with all the benefits that this entails. Confidence from our users about what we do, entry to the marketplace, getting patches from users and many more. Just having the ability to directly talk to our community with the code in front of all of us has been invaluable.

At the same time, we sell licenses to RavenDB, which is how we make money. The idea is that we provide value above and beyond whatever it is our license cost, and we can do that because we are very upfront and obvious in how we get paid.

We have a few users who have chosen to go with the AGPL version and skip paying us. I would obviously rather get paid, but I have laid out the rules of the game when I started playing and that is certainly within the rules. I believe that we’ll meet these users as customers in the future, it isn’t really that different from the community edition which we offer freely. In both cases, we aren’t getting paid, but it expands our reach, which will usually get us more customers in the long run.

We have been doing this for a decade and Hibernating Rhinos currently has about 30 people working full time on it, so it is certainly working so far Smile!

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