| I think a good way to get an understanding of this is to start a company yourself. You’ll quickly learn why businesses make the decision to pay for software instead of cobbling together open source. Let’s say you’re a small, but growing company doing $2M ARR. You absolutely could run your email marketing using an open source tool hooked up to Amazon SES and save a thousand bucks a month over something like Mailchimp. But the problem is, it’ll take you up to a week to get setup (thousands of dollars lost already) and then none of your employees will understand how to send emails with it (thousands of dollars wasted in training). Once they do understand how to use it, it will likely still be slower than a dummy-proof visual UI that has been battle tested on thousands of customers instead of an esoteric open source solution. If it wastes 8 hours of employee time per month, that’s another $1k a month lost. Then when something goes wrong, which it always does, it’ll require expensive developer time (likely costing the company $1000-$1500/day per engineer all-in) instead of a simple support phone call. And when you realize the open source version is missing a feature you need, you have to build it yourself, of which any trivial engineering task inside the company will cost at least $5k in employee time. Not to mention the cost to maintain the feature when the open source team breaks it with an update. So, you’re already in the hole and losing money compared to Mailchimp. This says nothing about the opportunity cost of engineering time that could have been spent serving your own customers, allowing you to generate more revenue. You can generate revenue to infinity, but can only cut costs to zero. For a growing company, time spent on cost saving over making new sales is likely time wasted. |
A startup in say, Mexico or LatAm will look at the OpenSource version of say Business Intelligence applications (Metabase, Superset in the link), then look at the commercial versions of them (Tableau, Lookr). With the price needed to pay for the commercial versions, the startup can hire 2 or 3 developers (at local rates) to do whatever improvements they need to the open source application.
Something similar happened to me with Jumio about 5 years ago: I wanted to use it. I spoke with their sales 2 or 3 times in 4 years. THe problem is that, every "verification" was costing more than $1 USD... for less than that cost, my company could hire 3 people a month to do manual verification and more (considering the cost of hiring + cost to the company, including Mexico's hefty employer costs). It never made economic sense to do implement automation.