Open Source vs. Closed Source

Jim Kuzdrall gnhlug at intrel.com
Sun Jan 15 14:58:00 EST 2006


On Saturday 14 January 2006 03:22 pm, Christopher Schmidt wrote:
> is there a better,
> more open way to attempt to make money off the application?

    I don't think you will make much in that business model, but there 
is a way to make a significant profit from your effort.

    If you sell to the non-programmer public, you will need to invest 
more in advertising than you can get back.  I don't think you have that 
in mind.

    You are  most likely thinking to sell to other programmers or 
computer hobbyists, a group you know how to contact cheaply.  But many 
of them will not be willing to pay the cost of processing the order, 
about $30 or so, for 100 lines of Python code they think they could 
write themselves.

    Why so much to process an order?  You would just do it in your spare 
time, right?   That is not the way to look at it.  You must price your 
product based on what it costs to have other people do it.  You are a 
top-notch programmer.  You shouldn't be spending any of your time 
performing order clerk duties that can be hired.  (If there is not 
enough business to keep a clerk busy most of every day, the enterprise 
is not worth your while.)

    Now, how to make real money.  Like it or not, our economy is 
shifting from selling "intellectual property" (goods that have 
virtually no manufacturing or reproduction cost) to services.  In fact, 
Linux has been the biggest wedge forcing this change.  (Aha! We are 
back on topic!)  Services are where your money lies.

    Give the applications away free, as you have been doing, but 
advertise that you will do custom modifications and installations for a 
fee.  In other words, use your intellectual property as a hook to get 
service business.  

    Only businesses have enough money to pay for the services of your 
profession.  But your computer programmers/enthusiast marketing ties 
will help.   They will connect you to the companies they work for - 
where there is real money.  And you can easily undercut a company's 
internal development costs - considering their inefficiency and 
overhead, making your service very attractive.

    How much should you charge for your service?   That is a topic with 
many strategic options to consider.  It is too big for discussion here.

    Does all that make sense?

    Most people do not realize how many hidden expenses there are in 
running a business.  If all you want is a hobby, that is different; you 
end up happy working for $1.50/hour.  But if you want to get the same 
money per hour as your regular wages (or more), the whole thing must be 
approached differently.

Jim Kuzdrall



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