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How to monetize open source

Open source provides the framework for a lot of innovative work happening in the tech industry. Despite this, open source is not as well funded as some startups that have emerged in the tech industry. As a result, open source maintainers need to explore alternate avenues for generating funding to support their work. I’ll share a few of the more lucrative funding opportunities that open source projects can pursue to fund their work.

Corporate sponsorship

Getting corporations to sponsor an open-source project can be an intensive process but can be a good way to ensure sustainable long-term revenue. Corporate sponsorships can be in-kind in the form of donated employee time or office space or direct sponsorship in the form of monetary donations. Companies usually provide sponsorship as part of their marketing budget, so it helps to make sure that the incentives provided for corporate sponsorship align with the needs of a marketing operation within a company. Companies that sponsor should be given as much visibility throughout the project as possible.

A business around open source

For maintainers with an entrepreneurial itch, building a for-profit business around the open source project can be a good model for monetization and sustainability. Often, the for-profit business acts as a consulting company around the particular project. Companies are more than willing to pay to get expert advice and education from the creators of an open source tool. In alternative situations, the business provides a hosted version of the open-source project that limits the amount of time that companies have to spend configuring and maintaining the tool in order to integrate it into their workflows. In general, it makes the most sense to build a for-profit business around an open source project if the project consists of a complete product. This complete product can be a CMS, a web framework, or a continuous integration system.

Pay-to-play system

Once an open source project reaches a certain level of popularity, users will undoubtedly start to request special features for their particular uses cases. This is great opportunity to institute a “pay-to-play” system where larger organizations can pay in order to have certain features added to the product. This works best for projects that have an extendable nature and tend to provide a limited framework for solving a certain problem without going all the way.

Grant funding

For open source projects that don’t have a profit-motive, there are several intuitions that provide grant founding to open source projects that align with the intuitions vision. The process for getting grant funding can be long and complicated, but some grants can provide rewards in the millions of the dollars. In general, grant funding works best for open source projects that facilitate a niche cross-disciplinary need.