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Right, and then you end up in the situation he described 3 paragraphs earlier: "In contrast, custom software development or consulting has a lower margin, beca
by roel_v 15y ago
Right, and then you end up in the situation he described 3 paragraphs earlier:
"In contrast, custom software development or consulting has a lower margin, because programmer time is included as cost of revenues. For every hour of time we charge, we have to pay an hour's wage to the developer who performed the work."
So still in a low gross margin position, where the only way to scale the business is to sell more programmer-hours.
- vog 15y agoThis is true for the custom development, but an Open Source business model is usually more. For instance, selling quality guarantees and providing hotlines can scale much better. That way, you invest a fixed amount of work in thorough testing, and sell this on every support contract. Also, investing programmer-hours in fixing bugs ensures you won't have to hire more hotline people to tell customers how to work around those bugs.
- roel_v 15y agoThat's just wishful thinking. Who sells 'quality guarantees'? It's always packaged as 'support', which boils down to support personnel man hours. So still pay for worked hours. If you fix bugs you need to contribute back to the trunk, at which point anybody can use them without paying for the dev time. Paying devs to work on such a project is useful mostly as a marketing tactic, and to develop in-house expertise on the tech. Let's face it, all open source business models boil down to repackaged and rephrased consultancy work, which scales by making more paid hours. It's as simple as that.