Monetization via Paid Bundling
June 19, 2022 ยท View on GitHub
AKA: Widget Frosting, Bundle with Hardware
(selling hardware on-top of OSS)_
The open-source software is monetized by selling a necessary hardware component (the widget) for it stand-alone (e.g., ) or in a bundle (e.g., a Raspberry Pi with a Linux OS). The OSS basically creates or adds value to the hardware item, which is collected when selling the hardware. Often generates one-time income with few options to generate recurring revenue.
Requires:
- Availablilty of a hardware system sellable with a premium or self-produced
- Creating bundled products with a USP on marketplaces or self-hosted eCommerce website
Variants & Options:
- Stand-alone Hardware: The hardware is sold independent of the OSS
- Hardware Bundling: Hardware (e.g., Raspberry Pi, hardware wallet, ...) and OSS is sold together
- Software Bundling: The OSS (e.g., a plugin) is bundled with another commercial software and sold
- Host bundling: The OSS is installed and hosted by the maintainers and then sold as a running system (incl. account, etc.)
- Pre-Install: The OSS is pre-installed on a data storage (e.g., Kubernetes on a SD card) and sold with a margin
Platforms
- Product marketplaces such as Amazon, Alibaba, etc.
- Auction platforms such as eBay, etc.
- eCommerce hosters such as Shopify, etc.
Evaluation
| Characteristics | Value | Note |
|---|---|---|
| Effort to set-up | Months | Requires development of additional hardware and shop |
| Effort to maintain | Medium | Requires buying hardware parts, bundling, shipping, etc. |
| Cost to set-up | High | Hardware production or purchasing cost |
| Cost to maintain | Medium | Maybe Hardware development cost |
| One-time Income | Medium | Hardware can have higher price, margin for third-party hardware might be slim |
| Recurring Income | Low | Might be possible for hardware updates or extensions |
| Income Predictability | Low | Higher if hardware is often updated or extended |
| Full income Threshold | 500+ | |
| Recipient | C | Might be an Individual doing a side-hustle with third-party hardware |
| Additional Work | High | Additional develoment & production effort necessary |
| Visibility | Medium | Buying an out-of-the-box system is very convenient |
| Necessity to pay | Medium | Own hardware must be bought but third-party hardware can be bought from a competitor |
| Entry Threshold | Low | Credit card is sufficient |
| Countervalue | Hardw. | |
| Scalability | Medium | Scales with the number of users (who want the hardware). Hardware might be useful for other applications. |
| Effort for marketing | Medium | Bundles are often convenient and offer a countervalue |
| Competitors | O | If third-party hardware is used everybady can be a competitor |
| Software types | Big SW | Better for big, complex and hardware-specific software |