Looking at open source business models, it can be difficult to find something that looks viable. Here are a few models along with my assessment of their pros and cons.

1. Pay for support and Consulting

In this model you provide the software for free and open source, but charge for consulting and support.

Pros:

• Easy model to understand – you just charge an hourly rate for consulting and support.

Cons:

• Since you don’t get paid for the 90% of your time that you spend developing the software itself, you are forced to charge 1000% of your required hourly rate just to make ends meet.
• You would be better off finding another open source project that someone else is sweating over and just charge for support on that one. Don’t waste your time developing anything new.
• If you insist on this business model, you’ll be in direct competition with anyone else that wants to set up shop to do consulting on your software – and they can charge 10% of your price since they don’t have to spend time developing the software.
• This only works when your software is something that people generally require support for. If your software is too well made, then people won’t need support or consulting.
• Gives incentive to make software that is complicated and hard to work with .

Conclusion: This one’s a big loser.

2. Charge for add-ons

With this model your primary product is free and open source, but you charge for add-on modules.

Pros:

• If you have a large user base this is a good way to give you a relative monopoly on the market for your add-on.

Cons:

• The open source culture may resist attempts at monetization of this sort. Users of free software often resist or resent attempts to add pay software into the mix.
• You must have a very large user base for the market to be big enough to support add-ons.

Conclusion:
This model has potential if done the right way.

3. Charge for Documentation/User Manuals

With this model you provide the software free and open source but you charge for access to the documentation. This model could work well for software that requires documentation to take advantage of (e.g. software frameworks, libraries, or complex systems that are managed by an administrator). In fact, in certain cases this has the same effect as charging for the software while keeping the software itself open and freely distributable per the spirit of FOSS.

This is because those people who are explicitly using your software and its features will need to purchase the documentation (so it’s kind of like purchasing a license for the software itself), but they can still freely distribute the software itself as part of their own projects (so it retains the basic freedoms that sit at the core of the FOSS movement).

Pros:

• Could work well for technical projects or software components that rely heavily on documentation.
• Acts like commercial software for revenue (1 documentation license per user).
• Software remains freely distributable.

Cons:

• Only works if the software is heavily dependent on documentation to use.
• Gives incentive to create software that is difficult to figure out (non-intuitive).

Conclusion:
This is a good model for technical software.

4. Donation-ware

This is the model where you offer your software up for free and ask (beg) for donations. This is a ridiculous model. It is not even a model so it isn’t worth a pro-con matrix. There are no Pro’s. I am philosophically opposed to the concept of donation-ware. I am a software developer, not a charity. If someone feels compelled to donate money to a cause, there are thousands of good causes: Cancer, Haiti, etc.. But don’t donate it to a software developer (unless he’s creating software to cure cancer).

You will NOT make any money by asking for donations. At most you will make a few people feel good about themselves for donating a dollar or two.

5. Advertising

With this model you treat your software as a means to generate traffic to your website and you try to turn that traffic into money either through selling another product, or through sponsorships.

Unless you get a ton of traffic, this model likely won’t make you enough money to pay for your webhosting plan.