The document discusses various open source business models including support sellers, loss leader, widget frosting, sell it free it, service enabler, and software franchising. It provides details on how each model generates revenue, such as selling support services for a free open source product, using a free product to sell other goods and services, or licensing the commercial use of an open source product. The goal of these models is to use free or low-cost open source software to attract customers and build brand loyalty in order to generate revenue through other means.

2.  Overview of traditional software business
models
 Introduction to various Open Source
business models like.
◦ Support Sellers
◦ Loss Leader
◦ Widget Frosting
◦ Sell It, Free It
◦ Service Enabler
◦ ... ...

3. "Competition is. In every business, no
matter how small or how large, someone is
just around the corner forever trying to
steal your ideas."
Alice Foote MacDougall - 19th century
American Business Woman

4.  Development of new products
 Brand enhancements and advertising
 Selling your customer the right to use your
product
 Selling Technical Support

5.  Support sellers
 Loss Leader
 Widget Frosting
 Accessorizing
 Service Enabler
 Brand Licensing
 Sell It, Free It
 Software Franchising
 Hybrids

6.  Base software free
 Sources of revenue
◦ media distribution
◦ Branding
◦ Training
◦ Consulting
◦ custom development
◦ post-sales support

7.  The term loss leadership defines a pricing
strategy, where a product is sold below costs or
distributed for free.
 The aim of this model is, to lead customers to
buy the other products from a company.
 Thus the product is not priced for the profit but
only to attract customers and to stimulate the
sales of other goods.
 It is a common strategy when a company first
enters a market or business and wishes to build
brand loyalty and other goodwill.

8.  In terms of software, a loss-leader, often an open
source product, is distributed as a market
positioner.
 Value is not generated by the product itself,
sometimes donating is available, but is generated by
selling additional services or tools to extend the
functionality of the free software.
 Another method is also to have the open-source
tool and the commercial tool, which is based on the
open source version, to get customers used to the
software concept; the commercial tool has much
more functionality and the same look-and-feel as
the open-source product.
 The free software is used to lead customers to the
product range or the company, so that they start to
buy the additional items or services provided by the
company.

9.  Companies selling widgets (hardware)
 This model is for hardware manufacturers,
Market pressures have forced hardware
companies to write and maintain software
(from device drivers through configuration
tools all the way up to the level of entire
operating systems).
 Earning goodwill, generating physical
goods sale

10.  Selling accessories - books, compatible
hardware, complete systems with open-
source software pre-installed.
 It's easy to trivialize this (open-source T-
shirts, coffee mugs, Linux penguin dolls)
but at least the books and hardware
underlay some clear successes, O’Reilly
Associates, and SSC are among them.
 Creating awareness of open source
 Generating brand loyalty for themselves

11.  Create a software - give it free
 Sell the services or subscription related to
the software thereby generating revenue
 Similar to Loss leader but different in of
execution.

12.  a company makes the research tool itself
open source but retains the rights to its
product trademarks and related intellectual
property and charges other companies for the
right to use those trademarks in creating
derivative products distributed under the
same brand name
 this requires that the product exist in two
different forms with two different names
official (trademarked), e.g. Netscape and
unofficial, e.g. Mozilla
 Customers pay for license to use your
product

13.  Loss Leader'' model repeated and extended
through time
 "Sell It, Free It," where a company's software
products start out their product life cycle as
traditional commercial products and then are
continually converted to open-source
products when appropriate
 Timing: When you free it is very important
 Your customers pay a premium for the value
of having the software earlier rather than later

14.  Franchising is a business model in which
many different owners share a single brand
name.
 A parent company allows entrepreneurs to
use the company's strategies and
trademarks; in exchange, the franchisee pays
an initial fee and royalties based on
revenues.
 The parent company also provides the
franchisee with support, including
advertising and training, as part of the
franchising agreement.

15.  Lack marketing power?
◦ Give your product free to the appointed
franchisees
◦ Train them
◦ Revenues would come from sources such as sales
of franchises and royalties based on franchisees'
revenues

16.  Supporting services are not the only way that an
open source business can make money.
 They can also make money from licensing.
 Clearly, if software is released under an open
source license it is not practicable to charge for
the software as your neighbor can give it away
for free.
 However, an open source software vendor may
choose to dual-license its software.
 This means that its software is made available
both under an open source license and under a
different licensing scheme that may incur a
license fee.

17.  But why would anyone choose the chargeable
license? There are some very good reasons
why this might happen.
 The most common by far is that the open
source software is released under a license
that imposes certain restrictions that the
prospective licensee is unhappy with.
 An example is when the open source code
will need to be re-used within a proprietary
software product; some open source licenses
do not allow this.

18.  Non Commercial usage are licensed under
one of the open source license (Most often
GPL)
 Commercial usage Charged