How To Make Money On Open Source Hardware

There are many ways to make money with open hardware and open source hardware. Please note that the primary goal of these methods is not to “get rich” but rather to provide a sustainable business model that allows projects to be profitable while remaining as open as possible.

You can make money from your open source hardware device by designing it so that it uses other people’s components, as long as you make those designs available to the public. Open Source Hardware is easier to sell because of its lower cost and high performance. But overall it’s still a risky business because you will compete with larger companies like Intel and Red Hat.

Designing & Selling Your Own Product

Of course, the first way to make money that I have to mention is to create your own product. Which means designing a product, manufacturing it in a factory and selling it to your audience. First, let me talk about the the typical argument against that way to make money. Because it’s all open-source, there is a chance that people will just take the design files from your website and make the product themselves. Or worse, some other guys living in countries where manufacturing is cheaper will just steal your design files and produce & sell your own product, but for much cheaper.

This is a valid argument, but in practice it doesn’t happen that much. Most of your audience don’t want to build the product themselves, especially if it’s a complicated one to build. Sure, they will use the files that are available for free to get insights on your product. They might make minor modifications, or use it as a base for another product. But only a few of them will build it from your design files. Also, even if another manufacturer is building your product for much cheaper, it will usually be at the expense of quality. And that will only help to build your own brand, according to DIY Drone’s CEO Chris Anderson in his book Makers: The New Industrial Revolution.

Back to the product creation, you will find a lot of articles and resources on this website to design, build and market your own product. Yet, even if it is the most straightforward way to make money with an open-source hardware business, it is also the most difficult way if you are a beginner. It usually requires a lot of efforts and investments before you have anything to sell, even if crowd funding platforms can help a lot on the last point. This is why I also advice to look first at other ways to make money if it is your first business.

Open Source your technology to create a community of co-creators and … save time

To get the community to innovate with Adafruit, Limor Fried open sourced its designs and allowed everybody to build on top of it by giving access to it on GitHub.

Adafruit also created online tutorials for each and every one of their kits. The link for the instructions is on every product page. Here’s an example of a tutorial they created to reverse engineer a Kinnect with their parts.

Having the documentation online allows Adafruit to update the instructions easily and get people to work with their products quickly and easily.

It sure looks like a lot of work to document each step of the process. But once you’ve done the whole documentation for a product, it will become a resource thousands of users can reuse without you having to explain it over and over again, saving you hundreds of hours and multiplying your effort by a thousand fold.

“Everything is designed to be painless,” Fried says. “I spend a lot of time thinking about how customers will interact with products so they won’t break them. And when we sell something, we always give good documentation to get (them) going in a couple minutes.”

And this is not only useful for electronic products. Other open source hardware companies, like Aquapioneers, who sell aquaponic kits, Afforestt, who grow urban forests 10 times faster, or Myfood, who sell connected greenhouses, have also documented their processes for their community, helping attract a lot of initial interest, and millions of views from communities of users, media and partners.

Takeaway:

  • Open Source your designs and tutorials, so you build a community of people who can freely build on top of your products and create new use cases and innovations.
  • Always stay on top of copycats by updating your products by including your community’s innovations and feedback.

Hosted Version of the Product

Some open source projects allow you to run their software on your own servers for free, but they’ll charge you for a hosted version. For example, you can deploy n8n.io to an AWS or DigitalOcean machine and keep it running on your own, or you can sign up for their hosted version and avoid the hassle of maintaining servers.

While this tactic won’t work for every open source project, it’s a very popular option. It offers a clear delineation between the paid and free versions of the product, and can be bundled with other features like support and training. The downside is that your margins are never going to be very high. If you charge too much, users will be able to justify the cost of maintaining their own servers.

Creating Accessories for Other Products

Instead of making your own product starting from zero, another way is to build accessories or add-ons for already existing products. The most common example would be Arduino shields, which are add-ons boards for the Arduino platform that add functionalities to Arduino projects.

Even if it also involves design & manufacturing, as for the creation of your own product from scratch, this way of generating money is much simpler for several reasons. First, the product that you aim to create is generally much simpler to design than creating your own product. Wether it is a 3D-printed case for a BeagleBone Black or an Arduino shield, it limits the number of components and design efforts.

You are also guided by the products you are creating accessories for. Again, creating a shield for the Arduino platform requires that you follow the specifications of the Arduino board in terms of size & IO pins. Manufacturing is also easier for the same reasons: usually manufacturers are used to produce Arduino shields for example. Finally, and the most important, marketing & sales are also so much easier when it comes to accessories & add-ons. You are creating a product for an already proven market, so you don’t have all the hassle to create an audience in a completely new market.

Open Core

Adam Wathan started Tailwind UI as an open source CSS library in 2017. After two years, he went full-time on the project and has now made $2 million in revenue from the project.

While Wathan’s story is exceptional, it highlights how a free, open source project can make real money by charging for extras (in Adam’s case it’s premade UI components). I would call Tailwind an open core product because while the framework and features are all free, you can support the project and save yourself time by buying extras.

Some open core projects do this by charging for features that larger customers are more likely to need like advanced user management, specialized integrations, or SAML access (there was a good thread on Indie Hackers about this model recently). This is a solid strategy if you know enterprise users will need certain things that individuals and small companies won’t.

Educating People by Writing About Your Knowledge

Running a business based on the open-source hardware model doesn’t necessary require to sell physical products. You can perfectly propose your knowledge as information products, like tutorials or eBooks. This is actually the model that I am currently using for this website. Before I had any products to propose to my audience, I shared my knowledge on home automation & open-source hardware via a series of tutorials. All this is available on this website, for free. This allows you to create a community around your ideas and your craft, and to get trust from your audience. This is for example also what Chris Anderson did with his community about open-source flying drones, DIY Drones.

Then, when you have created a community around your craft, you can think about proposing paid products. These products can be books that organise the ideas and projects found in your articles in a structured manner. You can also use affiliate links (for example via Amazon) to gain a commission on the products and components you feature in your articles and tutorials.

Sell Binaries

Code
 Pixabay

Open source code is just that — source code. In some computer languages, such as C++, the source code cannot be run directly. It must first be compiled into what is called a binary or machine code. Binaries are specific to each operating system. Depending on the source code and the operating system, compiling into binary ranges in difficulty from easy to difficult.

Most open source licenses do not require the creator to give away free access to compiled binaries, only to the source code. While anyone can download your source code and create their own binary, many people either don’t know how or won’t want to take the time.

If you have the expertise to create compiled binaries, you can legally sell access to these binaries for different operating systems, like Windows and macOS.

Conclusion

Now that you’re done building your open source hardware project, what are you going to do with it? You might think the only way to get compensated for creating open hardware is to sell the hardware itself. But what if there was another option? Even if you don’t plan on selling the hardware itself, you can use the hardware as a platform for a product that you can sell.

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