So...how do you make money when using free and open software?

by Don Christie

People often ask how Catalyst IT can make money when promoting free and open software?

The flippant answer is - "you don't...and if you think you can, you're doing it the wrong way". After all, open source operates under a licence to freely adapt, change and distribute the software to anyone.

The only way we can charge then is through a service model that absolutely understands how and where we add value to our clients' businesses.

That's a lot different that being locked into someone's proprietary software under a product-sale model, where the client has to keep on forking out money all the time while often receiving poor service.

It's the service, stupid

Because we're open source it is very clear that we must continually add value to our clients through our own intellectual capability and our engineering know-how.

That means our service-based offer has to be around:

  • innovation
  • security
  • stability
  • scalability.

Typically our clients don't move on (even though they're free to do so), and as their business needs change, we have to adapt and innovate alongside them.

That's resulted in an average Catalyst growth rate of about 20% a year across revenues and head count, and we've been doing that for a long time.

It has helped us to become the largest open source software company in Australasia, and we like to think we've helped break in new ground for other open source companies in Wellington and beyond. They are more collaborators than competitors as the market is getting bigger for all of us.

At Catalyst's core, open source is what drives our competitive advantage – given that we can't and don't charge for software.

Open source gives us a freedom to innovate, a freedom to create new technologies and new software and a freedom to very quickly bring those to market.

Not only does that keep us moving forward, it also means our clients benefit as we're continually adding value to their businesses.

It also means we're not distracted by trying to protect the past, which is exactly what restrictive approaches to intellectual property – such as software patents - attempt to do.

As an open source company, Catalyst stays ahead by bringing new services and tools to market faster than anyone else.

There's value in that, value that our clients are happy to pay for.