How Much to Charge for Cloud Based Open Source?

xTuple becomes the latest open source provider to offer a trial in the cloud. The question is what do you charge

xTuple develops a suite of open source ERP solutions that run on the PostgreSQL open source database. Whether they are open core, open source or based on open standards is a question we can answer another day. The truth is probably a little bit of each. But what I wanted to discuss today is their move to offering a hosted version of their software.

Similar to Standing Cloud, which I wrote about a few weeks back, xTuple is offering a free trial. The trial will run on the Amazon EC2 service. You can migrate your existing implementation, start a new one, etc.  It actually sounds pretty cool.

From xTuple's point of view, they always supported the cloud. Their software runs in most environments. So what is different about this?  xTuple is offering the service themselves. Back in the dot com days I helped build a company called Interliant. We were one of the early ASPs. (application service providers). This was cloud before there was a cloud. Anyway, we would have called xTuple an ISV. They develop an application that we are hosting and we can both sell it to our customer base.

So yes the cloud concept is new, but is it really?  In any event, one of the challenges we always had at Interliant was what to charge for these ISV apps? You need to figure in your cost of infrastructure, software, support, SLA compliance, etc.  Prices would vary widely, especially if you had a paying customer on the hook.

I see the same problem now. Both xTuple and Standing Cloud are offering free trials and have made clear they are going to charge for this service soon. They just haven't said how much. Whatever the market will bear is not an answer either.

With open source, it is particularly more difficult. If you are not paying anything for the software license, you are paying for support and infrastructure only.  The cost of the infrastructure, such as a EC2 is fairly easy to find out. So how much can you charge for support?

The success of open source application hosting in the cloud will depend on how affordable providers like Standing Cloud and xTuple make it.

To all my readers who are celebrating Passover today, have a happy Passover and enjoy the holiday!

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