At some point in the past year I watched a video of an Eric Sink presentation and he asked the following question (he said it was asked of him by a college student):
Why would someone buy your product when it has an open source competitor?
He didn’t answer it in his presentation, but if I remember correctly he said that to a college student, who tends to have a lot of time and little money, a product like Eric Sink’s Vault (which runs $299/license) is an enigma.
Why would someone pay $299 per user when there’s a perfectly suitable alternative available for free?!
Time vs. Money
At one point during college I had $6 in my checking account. This lasted for about three months.
I remember riding across campus, about a 15 minute ride (each way) to save $.50 on a slice of pizza. This is inconceivable in my life today. Back then, time was abundant and money was scarce.
Then I graduated and got a job. At a salaried job making $80k plus benefits your time is worth around $55/hour. Suddenly that ride across campus to save $.50 doesn’t seem like the smart money decision it once was.
And thus it is with the majority of open source software:
Open source software is free if your time is worth nothing.
I’m bracing my inbox for emails from disgruntled Gimp users explaining how charging for software is bad, commercial software is evil, and my mother dresses me funny. But I don’t buy it.
I’ve used mainstream image editors like Photoshop, Paint.NET and Gimp; some of my best friends are mainstream image editors. And when I saw Gimp I almost went blind. Children were weeping; fruit was bruising. The UI could kill small animals.
Are there exceptions in the open source world? Absolutely.
When an open source project gets enough talented people working on it, it can become a downright masterpiece.
Firefox rocks. WordPress is awesome. Paint.NET rules. And Linux is pretty cool, though the lack of drivers and ease of use as a mainstream desktop OS after all this time is still a disappointment.
And yes, I know about Ubuntu. I also know that every friend to whom I’ve recommend it has run into major compatibility issues or complete lack of drivers. Ubuntu is free, after 6 hours of research and command line tricks trying to get your laptop to connect to your network.
Have you ever tried Gimp? Or the admin control panel in Zen-Cart? Or tried to install a Perl or PHP module that didn’t come out of the box? I’ve been a web developer for 10 years and I cringe when I see that I need a module that’s not included…there goes two hours of my day searching, configuring and installing dependencies.
As a developer I’ve probably had contact with 300 open source projects, components, and applications. I estimate 80% of them required substantially more time to install, use, or maintain than commercial counterparts.
But depending on the price and feature set of their commercial counterparts, sometimes it’s worth using the open source app and sometimes it’s not. $299/user for Vault vs. $0/user for Subversion? It depends on how badly you need live support and guaranteed bug fixes.
The areas that kill the most time when consuming open source software are:
- Installation process
I’m sure we can all point out a handful of open source projects that have decent documentation and decent usability. The vast majority do not. Even fewer can be installed in five minutes or less, even by an experienced software developer.
How to Compete Against Open Source
As a commercial software vendor you have to focus on your key advantages over open source software:
- Save Your Users Time. Ensure a painless installation process, top notch documentation, top notch support, and a minimal learning curve for getting started using your application.
- Market Hard. You have a marketing budget; odds are high your open source competitor does not. If you can position your product well and build a reputation for good documentation, support and usability, you will sell software.
- Focus on Features for Your Demographic. Your open source competitor is going to win when it comes to college students, hobbyists, and other groups where time is worth a lot less than licensing cost. You will have an edge with business users since time is highly monetized for entrepreneurs and enterprises. Build features for people who are likely to buy your product.
You will find more success focusing on your strengths rather than your weaknesses.
Remember: while you’re not going to win a feature race against an open source competitor, you’ll do even worse in a price war.