Our Open Source offering is a tier, not our competition

More than once we’ve been in discussion with prospective customers on what tier is the right tier for their current Node-RED adoption. The question is likely to come up "Why wouldn't we just use the open source version of FlowFuse?". The implicit discussion created is one that is alike the question: “Why wouldn’t we go with your competition?”. For FlowFuse, and most other open-core companies like us, the open licensed and free to use core is tier, not competition.

In the traditional sense, the prospective customer is right. By the definition, a customer buys goods or services by exchanging it for money. For FlowFuse’s open-source edition, which is free as in beer and free as in speech, no money changes hands. It can be installed and run by anyone. Once the software is being installed and used, we consider we've gained a new customer. There’s an agreement in place, the Apache 2.0 license, and value is obtained by the customer. The only missing component compared to an ‘ordinary’ sale is the lack of money from the customer to FlowFuse. The fact that no monetary value is exchanged, like the situation where a customer picks the competitor, doesn’t make the open source tier competition. It is just a free tier.

Another reason it's really a tier is that the core of the product is the same. In many open-core products, the path to upgrade from the open source license product to the paid tier is much alike customers are used to on SaaS models. In the reals of self-managed software that's mostly uploading a license and at times a few configuration steps.

Furthermore, the open tier is a tier as the customer choses to not adopt all capabilities. They're leaving value on the table. Either this is because it's not quite clear what the value is or if the higher tiers provides enough business value to warrant the expense. Or the adoption journey for the customer doesn't yet require the full featured tiers.

What’s unique about open source software, is that customers can exchange value towards the company and community building the software in other forms: by opening issues, updating documentation, advocating for the OSS variant, among other ways. While this is not money, it is significant for a young company like FlowFuse.

#  Challenges with a open core free tier

That's not to say that an open source tier is a silver bullet for a company. For one, it's hard to track how many users a software package has, and who these users are. For example; FlowFuse has Telemetry, though it can be turned off. Nor do we know who hosts this software.

Another challenge is around product and feature packaging. At FlowFuse and other open core companies it's uncommon to move features from the open tier to paid tier only. If this choice has been made it's a done deal, even when the product team got it wrong. Usually the initial thoughts are therefor to move all features into the paid tiers. However, this hampers long term growth as adoption of paid features are adopted later or not at all. We follow the Open-Core buyer based model to segregate the value, about which I'll write a post next time.

Photo by Matt Hardy.