What is Open Source?

Open source software is software that can be freely used, modified, and shared (in both modified and unmodified form) by anyone. Apart from software, it's also

A Method: to develop and distribute software, Set of best practices to make software and build teams that make software.
A Movement: It is based on ideals and philosophy beyond only code; It's rooted in belief that software has an impact greater than any one of us and certain freedoms should be protected.
A Culture: It's a collection of people, values, and ideas that take the form of software projects and communities.

Ethos of open source runs deep. The word Free is often confused with free in terms of free pizza or free beer, whereas in Free and Open Source software context, we mean free as freedom of Speech. As per OSI's definition: A project can't be called Open Source unless it includes 4 freedoms. 1. Freedom to Read - source code 2. Freedom to Run - build the program using source code, and use anyway preffered 3. Freedom to Revise - Make a change 4. Freedom to Redistribute - Share the modified, or unmodified software with anyone.

These freedom allows any Open Source software to be monitized. Infact, as per the definition of Open Source point 1

1. Free Redistribution

The license shall not restrict any party from selling or giving away the software as a component of an aggregate software distribution containing programs from several different sources. The license shall not require a royalty or other fee for such sale.

If you are restricting commercial usecase on a software - it can't be considered Open Source.

Why Are Companies and Governments Turning to Open Source?

There are many reasons for using, supporting, and creating open source software. Benefits include the following:

Multiplying the company’s investment: Open source benefits from the famous principle: "The smartest people in every field are never in your own company." At best, an ecosystem of innova tion will grow up around an open project. Evidence that opening a project pays off financially comes from a recent report prepared under World Bank auspices. Careful tracing of contributions to their project—a form of geospatial software called GeoNode—showed that the World Bank’s subsidiary had invested about one million dollars in the project but had benefited from an estimated two million dollars invested by other organizations.
Benefiting from the most recent advances There is no need to reinvent the wheel in-house. A company can innovate more quickly by using tools and existing code that you can get with a simple download and installation process.
Spreading knowledge of the software When the code is open—and especially when a robust community grows up around it—adoption is broader. This initially takes effort on the company’s part, but it leads to more people throughout the industry understanding the code and the contribution process.
Increasing the developer base Broader adoption, along with wide discussion of the source code, translates into a larger pool of talented developers from which the company can hire to work on the code and related projects. Upgrading internal developer skills The spread of knowledge goes in many directions. Developers already recognize that the best way to learn good coding skills is to work on an open source project because they can study the practices of the top coders in the field. These benefits spread to the company that employs the open source developers.
Building reputation Most people want to work for organizations they can boast about. Adopting open source—both the code and the practices that go with it—shows that your organization is cool. And if you can release your own code as open source and win adoption for it, you prove that your organization is a leader in your field, adept at the best development practices.
Recruiting and retaining developers Good developers want to work on exciting projects that affect large groups of people. They also want their skills and contributions to be widely recognized, and they enjoy the interactions they can have with peers around the world. All these considerations lead them to gravitate toward open source projects, and if your competitors are more successful than you in supporting such projects, developers will bring their talents and reputations to those companies instead of yours.
Faster startup of new companies and projects In the frenetic pace of today’s social and business environments, a startup or new division needs to go from concept to product in months, not years. Working with a community, both on existing software and on your own innovations, saves you time and lets you focus limited employee time on critical competitive parts of your product.

Many governments have launched major open source policies and initiatives. As France and the United States demonstrate, we are now seeing a shift from the use of open source to policies that encourage the development of open source and investment in open source communities. Some have committed to an “open source first” strategy, requiring vendors as well as internal developers to use open source licenses and practices wherever possible. For example, the government of France has stated that all agencies must do future code work in open source. With such policies, agencies can revise obsolete, expensive, slow procurement practices that have been notorious for causing failed software projects and outra‐ geous cost overruns. For governments, open source becomes a staging ground for the latest, more responsive software practices that have proven more efficient and productive in other sectors. Furthermore, governments are realizing that each agency’s needs are similar to other agencies, around the nation and around the world. Open source means, at least, that the investment made by one agency can save money for all the rest— and, at best, that the agencies will share requirements and collaborate in the clas‐ sic open source manner to create software that helps governments better serve their citizens everywhere. Open source collaboration also opens opportunities for smaller companies, citizen developers, and nonprofits to contribute to innova‐ tion in government services. Finally, the software creates a common standard that fosters interoperability for many kinds of development.

Financial Sustainability with Open Source

In business terms,

Target market encompasses all potential customers who may need your product.
Channels refer to the various methods through which these potential customers become aware of and engage with your product.

A successful channel effectively captures the interest of these individuals, bringing them into the sales process. This process is conceptualized as a sales funnel, where the initial broad interest is narrowed down through various stages, ultimately leading to a sale.

This framework is applicable across the spectrum of business types, from small-scale ventures to large corporations. It's crucial to note that Open Source, often discussed in the context of business models, is more accurately described as a distribution channel rather than a standalone business model. So no matter your business model, Open Source can fit in, as a channel!

I recommend reading Open source is NOT a business model (and your business will fail if you think that it is" by VM Brasseur