Commercial open source is a disputed phrase in the computing world. In principle, open source software involves the source code of an application or system being freely available, with no restrictions on its alteration or use. Commercial open source usually means producing a commercial product based on open source software. However, there is an argument than such activity often breaches the principle of open source, and that the phrase itself is self-contradictory.
Open source is fundamentally about the code behind a system or application not being a secret. This means that other developers can look at the code, adapt it and come up with ways to improve it. The open source principle is underwritten by licenses which often say that any adaptations and uses of the code must also be made open source for others to use. There are usually also requirements that any application which derives from the open source code must be distributed without charge.
There are several ways a company selling commercial open source software can make money from it while arguably sticking to the principles of open source. The most common is to supply the software free of charge, but to charge fees for user support. Similarly some firms will charge for training staff to use the applications.
Another method is to issue the software in a truly open source form, but to simultaneously issue a commercial version which has additional functionality. Some firms will supply users with a commercial application and an open source framework which work in partnership but are arguably separate entities. This is often disputable as in most cases the commercial application cannot function without the open source framework. Another workaround is to sell online services which remotely access open source software based on the company’s servers rather than the customer’s own computers.
Few, if any, companies have found commercial open source software to be profitable. One reason for this is that the many of the costs of producing and marketing software are the same, regardless of whether it is based on open source coding. This means many firms have to charge a significant fee on the software to make it profitable. This puts the software in an awkward pricing point, between the cost advantages of software distributed free of charge and the service advantages of buying a full-priced product for which customers feel more comfortable in expecting and demanding solid support and a higher level of reliability.