Tuesday, March 03, 2009

Do you ever buy bottled water?

Mark de Visser recently posted about Open Source pricing, asking "Is there a formula for what open source software should cost?".

I don't think there is - or should be - a formula for what Open Source software should cost compared to proprietary software. Foremost, there is rarely an exact proprietary equivalent to an Open-Source offering. Even if there was, the product itself is only part of what you buy. And even within the proprietary world, prices often vary widely for similar products. (Did you ever buy bottled water?)

But I agree that pricing should be straightforward and transparent in general. At Magnolia we originally tried per-user pricing but it quickly turned out to be too complicated, too many questions asked ("what exactly counts as a user"). We have had a per server pricing for the last 2.5 years and we have always published our prices on the web, easy to locate. This way, we minimize our effort, which is a big part of what Open-Source distribution is all about. We focus on the product, not on sales.

Now, this cost reduction can either be propagated to our clients through lower prices or through better software. I don't think the purchase price should be the first reason why you should look at Open Source. If you pay 1000 USD for a car that can only turn left, would you consider that a good deal? Thought so. So the real driver should be value, and the value proposition of Open Source is rather different from the value proposition of closed-source, proprietary software.

The real value of Open-Source is in the its openness, which for true Open-Source products goes far beyond source code availability. Some ideas:

If your IT team is working with an Open-Source product, they will have more interesting and more satisfying work to do and they will learn things that are actually useful for many years to come, as Open-Source products tend to be based on standards. The result is not only cost savings down the road (because your in-house-team can and wants to do more themselves), but also a generally better implementation because you have a motivated team close to the client. Finally, your IT staff turnover is reduced, which further improves your ROI.

So if you pay 20% or 120% for Open-Source compared to a proprietary product has little to do with the value you get. In fact, I would argue that Open-Source provides more value, which is exactly why Magnolia is Open-Source software.