Can You Sell Open Source Software?

The Legal Basis for Selling Open Source

The idea that open source software cannot be sold is one of the most persistent and damaging misconceptions in the technology industry. The Open Source Definition, maintained by the Open Source Initiative, explicitly addresses this in its very first criterion: the license must not restrict any party from selling or giving away the software. "Free" in the context of free and open source software refers to freedom (as in free speech), not price (as in free beer). This distinction is fundamental.

Every major open source license, from MIT to GPL to Apache 2.0, permits commercial use, modification, and distribution. There is no open source license that prohibits selling the software. What varies between licenses is the conditions attached to distribution (such as providing source code for copyleft licenses), not whether commercial distribution is allowed.

The GNU GPL, which is often perceived as the most restrictive mainstream open source license, explicitly permits selling. The Free Software Foundation's official FAQ states that distributing free software for a fee is legitimate and encouraged. GNU/Linux distributions have been sold commercially since the early 1990s. The GPL does not restrict price; it restricts what you can prevent others from doing with the software after they receive it.

The practical caveat is that while you can sell open source software, anyone who buys it receives the rights to redistribute it themselves, including for free. This means that a business model based purely on selling copies of unmodified open source software is not sustainable, because customers can share it freely. Successful commercial open source business models therefore rely on selling things that cannot be freely redistributed: expertise, support, hosting infrastructure, proprietary extensions, or the convenience of a managed service.

How Companies Make Money from Open Source

Billions of dollars in annual revenue are generated by companies whose primary products are open source software. These companies have developed several proven business models that work within the constraints of open source licensing.

Dual Licensing

In the dual licensing model, the company offers the software under two licenses: a copyleft license (usually GPL or AGPL) for free, open source use, and a proprietary commercial license for companies that want to use the software without complying with the copyleft requirements. The copyleft version is functionally identical to the commercial version; the difference is purely in the license terms.

This model works because many companies would rather pay for a commercial license than deal with the obligations of the GPL or AGPL, especially the requirement to release their own source code. MySQL was the pioneering dual-license success story: the database was free under the GPL, but companies that wanted to embed MySQL in proprietary products purchased a commercial license from MySQL AB (later Sun Microsystems, then Oracle). Qt uses a similar model, offering LGPL and commercial license options.

Dual licensing requires that the company own or control the copyright for the entire codebase, because you cannot offer a proprietary license for code that other people have contributed under a copyleft license without their permission. This is why dual-licensed projects often require Contributor License Agreements that grant the company the right to relicense contributions.

Support and Consulting

The support model generates revenue by selling expertise, training, and professional services around open source software. The software itself is free, but companies pay for help deploying, configuring, maintaining, troubleshooting, and optimizing it.

Red Hat is the defining example of this model. Red Hat Enterprise Linux (RHEL) is based on GPL-licensed open source software that is freely available. What Red Hat sells is a subscription that includes certified builds, security patches, long-term support, enterprise certifications, and access to Red Hat's technical support team. IBM acquired Red Hat in 2019 for $34 billion, demonstrating that a support-based open source business model can generate massive value. SUSE, Canonical (Ubuntu), and many smaller companies operate variations of this model.

Managed Hosting and Cloud Services

The managed hosting model generates revenue by running open source software as a cloud service, charging customers for the convenience, reliability, scalability, and operational expertise of a managed deployment. Customers pay to avoid the complexity of running the software themselves.

This model has become extremely successful and somewhat controversial. Amazon Web Services offers managed versions of numerous open source databases and tools (Amazon RDS for MySQL and PostgreSQL, Amazon OpenSearch, Amazon ElastiCache for Redis) that generate significant revenue. The controversy arises because the cloud provider captures revenue without necessarily contributing proportionally to the open source projects it monetizes. This dynamic motivated several open source companies (MongoDB, Elastic, Redis) to change their licenses to source-available terms that restrict managed service offerings by third parties.

Open source companies also run their own managed services. MongoDB Atlas, Elastic Cloud, Confluent Cloud (for Apache Kafka), and Grafana Cloud are all managed hosting services run by the companies that develop the open source software. This model aligns the company's commercial interests with continued investment in the open source project.

Open Core

The open core model makes the core software open source while keeping certain features, usually enterprise-oriented features like advanced security, monitoring, or management tools, proprietary and available only in a paid version.

GitLab is a prominent open core company. GitLab Community Edition is open source under the MIT License. GitLab Premium and Ultimate editions include additional features for security scanning, compliance, and advanced CI/CD that are proprietary. Sidekiq (the Ruby background job processor) uses a similar model: the core is open source under LGPL, while Sidekiq Pro and Sidekiq Enterprise add features like batches, rate limiting, and periodic jobs for a license fee.

The open core model works well when the core software is useful on its own and the premium features target enterprise buyers with budgets for tooling. The risk is community frustration if too many useful features are held back from the open source version, making the free version feel like a crippled demo rather than a complete product.

Marketplace and Ecosystem

Some companies generate revenue by building an ecosystem around open source software rather than selling the software itself. WordPress is the best example. WordPress itself is free and GPL-licensed, but the WordPress ecosystem generates billions of dollars annually through premium themes, plugins, hosting services, and agencies. Automattic, the company founded by WordPress co-creator Matt Mullenweg, generates revenue through WordPress.com hosting, WooCommerce, Jetpack, and other services built on the open source WordPress platform.

Why This Matters

The commercial viability of open source software is not a theoretical question. It is a settled reality demonstrated by decades of successful companies. Red Hat generates over $3 billion in annual revenue. Automattic (WordPress) is valued at billions. GitLab went public in 2021. Confluent, MongoDB, Elastic, and HashiCorp have all built substantial businesses around open source foundations.

Understanding that open source and commercial success are compatible is important for both developers and business leaders. For developers, it means that choosing an open source license for your project does not preclude building a business around it later. For business leaders, it means that open source software is not inherently non-commercial and can be a foundation for significant revenue generation.

The license you choose does affect which business models are available. Permissive licenses make the open core and managed hosting models easy but provide no protection against competitors offering the same software as a service. Copyleft licenses enable the dual licensing model and provide some protection against proprietary competitors, but they may limit adoption among companies that avoid copyleft dependencies. The right choice depends on your business strategy, and our guide to choosing an open source license can help you navigate that decision.