Open Core
TLDR
A commercial software model where the core is open source and advanced features are proprietary.
Definition
Open core combines an open-source project with a commercial product that adds features the company does not release openly. Typical proprietary additions include enterprise security (SSO, audit logs, RBAC), managed hosting, compliance certifications, and commercial support. The open-source core drives adoption and community; the commercial layer drives revenue.
Why it matters
Open core reduces customer acquisition cost because the open project attracts users who would not respond to outbound sales. It also builds a pool of experienced users who become champions inside the enterprises that eventually buy the commercial product. The risk is that a well-funded fork or a cloud hyperscaler can commoditize the commercial layer.
Odoo is the canonical Belgian open core company: its ERP is free, the enterprise version and hosted service are paid. The tension between openness and commercial moats is a recurring strategic question in this category.
Mechanism
The company must draw a clear line between what ships in the open repo and what ships in the commercial product. Moving a feature across that line, in either direction, generates community conflict. Most mature open-core companies use a Contributor License Agreement (CLA) to retain the option to re-license the core if needed.
Related
- Parent: B2B SaaS
- Sibling: Product-Led Growth - open source is one of the oldest forms of PLG