How Much Does Open Source Cost?

One of the first questions potential Open Source customers want to know when they start the research process is How much does Open Source (support/consultancy/training/systems integration) cost? Here at SiriUS, I'd imagine we get this question hundreds and hundreds of times a year, usually within the first few minutes of the first conversation.

We totally get it! Price matters (alongside other factors), and your budget dictates what you are able to achieve. You need to be able to develop your initial budget and plan for ownership costs, no matter what kind of system you are building.

Here's the problem... the fact is that Open Source systems have so many options, and come in so many different sizes, it can be tough to truly know how much it will all cost when first setting out.

Still, I'll do my best here to give you some realistic price ranges as to what most organizations will spend, and also try to do my best to explain some general pricing guidelines. Please remember from the start they can vary drastically depending on factors such as scale, complexity, number of users, and so on.

Cost in the Proprietary Software World

The most frequently used concept in the Proprietary world is that of 'Total cost of ownership' (TCO), which is an attempt at a financial estimate of the total direct and indirect costs of a system. Originally popularized by the Gartner Group in the late '80s, TCO seeks to quantify the financial impact of deploying software over its entire lifecycle. While TCO models vary, they usually seek to incorporate software, hardware, and 'knowledge/skills' costs (including training and consultancy). Software licenses, for example, are typically one component of TCO, support is another.

The FREE-myth

"Because the software is free, everything must be free, right?"

I like to call this the 'free-myth'. With proprietary software, it is taken for granted that not only will you pay for the software itself (in the form of licenses), you also expect to pay for initial evaluation, consultancy, systems integration, training, support and maintenance, additional staff, and any number of other costs as part of TCO across the system's entire lifecycle.

With Open Source, also called Free Software, even substantial enterprises can get the idea that all the usual rules of implementing software systems are somehow suspended.... We love Open Source, but I gotta tell you it isn't magic pixie dust! Nobody in the proprietary world thinks this way, and you shouldn't with Open Source either. You still need evaluation systems, consultancy, systems integration, training, support and so on.

Proprietary vs Open Source Licenses

A big component of proprietary software TCO is the license fee, and proprietary licensing models can be complex, and even confuse procurement experts!

There are a number of different proprietary licensing models - 'Perpetual', 'Floating', 'Subscription', 'Metered', 'Use Time' (or 'Consumption-Based') and more. The common factor is that they are more or less complex ways of charging you to borrow the software the vendor has written. Treating 'intellectual property' like finite-resource 'physical property' (subject to the 'tragedy of the commons') you pay for the number of users who use the software, or the amount of physical resources it's running on (processors, cores, servers, or similar), or other similar measure. In fact there is no such relationship in the real world - software can be replicated as many times as you like and it's marginal cost of production tends towards zero.

Another myth in the Open Source world is that it has no licenses. Simply not true. However Open Source licenses do turn on their heads the assumptions of proprietary licenses based on scarcity, secrecy and hiding to make software freely available to run, study, redistribute and modify. One of the implications of this radical re-imagining of software licenses is that Open Source cuts out an entire category of costs, license fees, at a stroke.

Costs in the Open Source world

And so we get to the point...

Open Source TCO should be comparable to proprietary TCO, except you should expect an entire class of costs to be stripped out. License Fees.

It is true that some vendors, actually quite a few, charge pseudo-license fees, but in all honesty this is not genuine Open Source. You will hear rationalizations like "we have an 'enterprise' version and a 'community' version", but in reality these vendors are applying a proprietary business model to a less-than-true Open Source development model. There's nothing wrong with that, but don't kid yourself - it's NOT Open Source. I call it 'Neo-proprietary'.

You should also expect to pay between 10-15% lower fees in the area of support, maintenance and managed service. This is pure economics - one of the advantages of being a successful proprietary vendor is software lock-in. This means that they can charge higher rates than in a competitive market. With Open Source the economic benefits accrue to the consumer, not the producer, of software. Simply speaking, Open Source vendors cannot charge the same exorbitant rates are single-source suppliers.

Consultancy rates for Open Source companies can run anywhere from around $600 per day up to $3,000 or more per day for the super-gurus. The old adage of "you get what you pay for" applies, but by the same token you don't need Linus Torvalds (founder of Linux) to restart a web server...

Support rates can go anywhere from a couple of $k up to $millions per annum depending on the size of the installation. As a rule of thumb $1,000 per server, per year should give you a starting point in your calculations. Emergency rates can vary from around $100 up to $500 per hour (it's much better value to have a long-term support arrangement). Open Source support should be based on anticipated support needs, nothing else. All other models are, frankly, arbitrary. Of course you should also view support costs as you view insurance. You hope to goodness you won't need it, but if you do you're happy you bought it. You need your vendor to have the resources there if and when you need them. Don't begrudge them if you don't use the support in any one period, consider yourself lucky!

As an example, here is our pricing. You can try googling for other Open Source companies' pricing, although it is sadly not too common for them to be upfront (no difference to proprietary vendors here!). Another example of an Open Source company with transparent pricing is a-team systems who you can find here.

In Conclusion

The real answer to "how much does Open Source cost?" is "it depends". You really need to talk with a friendly vendor and tell them exactly what you have in mind, and be prepared to discuss scale and likely workloads, including number of users. If you already have data on how much support (number of tickets, number of man-hours) the system will need this is ideal, otherwise it really is working out a best guess between you. It helps if your vendor is willing to have flexibility and renegotiate prices each anniversary in case either of you gets it wrong either way.