Proprietary Versus Open Source Software: What You Need to Know

Before you and your software development partnerbegin work on your latest idea, you need to decide how to monetize it. Will you make it proprietary and require users to purchase a license and sign an end user agreement? Or will you design your project as open source, and make money off side-channeling? Software development takes an idea, an investment, and a commitment, and none of these come cheap. Before you re-invent a bigger and better wheel that will change the world as we know it, there’s an important decision you must make: Proprietary or open source?

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What Is Proprietary Software?

Proprietary, or closed-source, software is software that an entity owns. It’s copyrighted, and those who use it are restricted from making changes to the code. In fact, most proprietary software boasts hidden source code for this very reason.

If you and your software development partner make your project proprietary, this means you own the intellectual property until you sell it to someone else. Users can purchase, install and use your software, but they can’t legally reproduce it or make changes to it in any way.

Monetizing proprietary software is simple — users must purchase it outright, or subscribe to weekly, monthly or annual access. Users pay for the right to install it on their machines and to use it according to the licensing agreement they accept before gaining access.

What Is Open Source Software?

If you’re using a software development partner to help you create open source software, then this means you’re probably planning to make your project available to users for free, and then monetize around it. Ways to do this include:

Charging those users who can’t install or maintain the software themselves.
Selling printed guides or lectures on how to get the most from your open source software.
Releasing paid enhancements at scheduled intervals.
Crowdfunding its development.
Targeting corporate sponsors.

Open-source software is free for users to use, share and modify, which means you’ll receive no income from sales of your creation. Rather, money is made by selling peripheral services and goods to make a heightened user experience.

After you’ve funded your project, either through crowdsourcing or other monetary methods, it’s time to choose a software development partner to help bring your idea to fruition. You need a team that’s able to share your same vision, that listens to you and hears what you have to say, and that has the soft skills assessment, knowledge and people to deliver the finished product.