Murgan Pal, The CTO of spike source has an entry in the Oriely Blog on an suggested apporach for Software vendors to migrate to the open source model.

Some interesting excerpts from the article:

As more and more IT and ISV executives understand the power and promise of open source, proprietary software companies are starting to adopt the open source model.

Migration steps:

• Decide on Business Model & License Type


• Make your product intuitive, easier to download, deploy and manage


• Conduct Technology Audit and do code walk through with architects and senior developers


• Blue Wash: Scan for IP issues (patent, copyright and license infringements)


• Community Involvement and Enablement

Pricing Model:
Commercial and Proprietary software vendors charge one time License (L) and annual Maintenance/Updates (U) plus Support (S) fees. Remember, in open source model - you 'may' not be able to charge for newer versions ('Upgrades') as that restricts customers and violate the open source adoption model. Typically, the maintenance and support costs are 18 - 22% of license cost. When you migrate to open source or SAAS model the L becomes zero as the software itself is free. Customers prefer at least two third cost savings on a 5 year TCO before making a software migration.

Hence, you may want to price your Updates & Subscription as a nominal annual subscription matching to 12% of your typical license costs derived from: [( L+L*5*20/100)*1/3*1/5 - mapped per year on a 5 year TCO of L+U&S after two third cost savings].

He has also written an earlier entry on the open source adoption model - here.

Prashanth RaiTag(s):OpenSource, Vendors.