Golden Mean Between Open Source and Profit Oriented Software

Is your firm earning money by selling software licenses to other companies who use your software? Maybe you personally like the idea of Free and Open Source Software (FOSS), but you are concerned about how your company would cover the development costs and achieve a profit if the software is freely given away?

In many cases, software-developing firms are probably right to be concerned.

Consider this equation:

                  development costs + marketing costs + profit
Price per user = ----------------------------------------------
                                number of users

Development costs and marketing costs are going to be positive numbers. Making the software free in the sense of FOSS will help to reduce these costs, but you cannot avoid a significant initial investment to get the program to a reasonably good level of usefulness and quality.

Let's assume that you want the profit to be positive, or at least non-negative. After all, you don't want to simply write off the capital which you have invested.

Then, unless the number of users is going to be very big, it will not be possible for the price per user to be so low that it would be covered in non-monetary ways such as through the publicity which your company gets from distributing the software.

This raises the question of how software licensing can be arranged so that development costs can covered also for more specialized kinds of software where the number of users is relatively small.

Adaptux GmbH proposes RewardRights licensing. This idea is still essentially untried, but it certainly looks promising!

If you would like to learn more about this approach to software licensing, please contact Adaptux.