Open-core model

Open-core Model

The open-core model is a business strategy employed by software companies that involves offering a "core" version of a software product as open-source, while providing additional proprietary features or services as part of a commercial offering. This model allows companies to leverage the benefits of open-source development, such as community contributions and widespread adoption, while also generating revenue through proprietary enhancements.

GitLab, an example of a company using the open-core model

Overview

In the open-core model, the core software is typically released under an open-source license, which allows users to freely use, modify, and distribute the software. The proprietary components, however, are offered under a commercial license and may include advanced features, support services, or integrations that are not available in the open-source version.

This model is often used by companies that want to build a large user base and community around their software, while also having a sustainable business model. By providing a free, open-source version, companies can attract users who may later convert to paying customers for the additional features or services.

Advantages

The open-core model offers several advantages:

• Community Engagement: By releasing the core software as open-source, companies can engage with a community of developers and users who can contribute to the software's development and improvement.
• Wider Adoption: Open-source software can be adopted more widely due to its free availability, leading to a larger user base.
• Revenue Generation: The proprietary components provide a revenue stream that can support the company's operations and further development of the software.

Challenges

Despite its advantages, the open-core model also presents challenges:

• Balancing Open and Closed: Companies must carefully decide which features to include in the open-source core and which to reserve for the proprietary version.
• Community Relations: There can be tension between the open-source community and the company's commercial interests, especially if the community feels that too much is being held back as proprietary.
• Competition: Other companies or projects may fork the open-source core and develop competing products.

Examples

Several well-known companies use the open-core model, including:

• GitLab: GitLab offers a free, open-source version of its DevOps platform, with additional features available in its proprietary "GitLab EE" (Enterprise Edition).
• Elastic: Elastic provides the open-source Elasticsearch software, with additional features and support available through its commercial offerings.

Related Pages

• Open-source software
• Proprietary software
• Business model
• Software licensing