Commercial vs Open Source Software: Benefits and Drawbacks

commercial software - Commercial vs Open Source Software: Benefits and Drawbacks

Explore the pros and cons of commercial and open-source software. Understand their differences to make an informed decision that best suits your business needs.


Join 2000+ tech leaders

A digest from our CEO on technology, talent and hard truth. Get it straight to your inbox every two weeks.

    No SPAM. Unsubscribe anytime.

    Business owners in need of software have two distinct choices – commercial software and open-source.

    “Global sales of enterprise software maintain steady annual growth and are expected to reach $421 billion by the end of the year” – Gartner.

    Meanwhile, organizations increasingly turn to open source solutions, including in the areas that have historically been associated with commercial software. According to the survey which queried 950 IT leaders worldwide, 68% of responders reported the increased use of open-source software at their companies over the last year. And 59% expect to do so in a span of the next 12 months.

    Let’s weigh the open-source and commercial software advantages (+) and disadvantages (-) to see which option suits your business the best.

    What is commercial software?

    Сommercial software is produced and distributed for commercial purposes. This article focuses on open source vs proprietary software that is distributed for a fee. However, various commercial software models exist, including free commercial software.

    With non-free licensing, the customer pays an initial charge for the software and an additional annual charge for support. The software vendor takes care of quality control, as well as of further maintenance, upgrades, and tech support. The company selling the software is expected to provide timely patches, bug fixes, and updates.

    As an example, just take a look at the best software solutions ranked by G2 Crowd Awards:

    • serverless computing platform AWS Lambda;
    • data visualization tool Tableau Desktop;
    • business analytics tool Splunk Enterprise;
    • e-commerce platform Shopify.

    Advantages of commercial software

    Some of the advantages of using commercial software for business purposes include:

    • Clear usage and licensing requirements. One of the benefits of commercial software for businesses is that it comes with a well-documented guarantee that you have support behind it.
    • A single point of contact for any problems. The reasoning here is as straightforward as it could be. When you’ve paid for a software product, there is a tangible counterparty to address if an issue arises.
    • A well-defined and upgrade and development plan for the software. Timely updates allow companies to prevent the expenses that result from technical failures.

    Disadvantages of commercial software

    Of course, there are some potential drawbacks of commercial software as well. Those potential pitfalls include:

    • No guarantees that the software will perform as needed. It’s only fair to expect a high-performing and secure solution when it’s backed by a corporate image, a QA team, and professional support. However, that’s not necessarily the case. The Software Fail Watch reports 606 companies losing over $1.7 trillion from software failures last year alone.
    • Strict licensing guidelines. Over a quarter of businesses admit opting for over-licensing in fear of software audits.
    • The vendor may decide to discontinue the software, and business owners will need to look for a comparable software package. Transitioning to a new software solution may not only cost you time and money but also cause data migration and integration issues. It will likely require re-training stuff as well.
    • Proprietary source code. You will be unable to tailor the source code for your needs. For any additional functionality, you have to upgrade to a more expensive plan.
    • Risk of software license waste. Except for software that is necessary for your company’s operation, a good chance is that the app will be just sitting there unused. Different researches estimate 30 to 37% of commercial software licenses in businesses being wasted or significantly underused. Camtasia Studio, Adobe InDesign, and Crystal Reports are among the most unused enterprise software.
    ⭐  Echo's handbook to 1-on-1 meetings: Benefits, Flaws and Check-List

    What is open-source software?

    Open-source software refers to that anyone can view the application source code. There are well over half a hundred approved open source licenses, ranging from permissive licensing that allows you to do just about anything to those with more strict enforcement on how the software will be used.

    The focus of the article is open source applications that fall under the former, free open-source software.

    Some of the top open-source software projects that hit it big recently are:

    • Red Hat was acquired by IBM for $32 billion.
    • GitHub was acquired by Microsoft for $7.5 billion in 2018.
    • MuleSoft was bought by Salesforce for $6.5B.

    Other prominent open-source companies are Confluent, DataBricks, HashiCorp, Kong, and Cockroach Labs.

    The Rise Of Open-Source Software | CNBC

    YouTube video

    This video was published by CNBC (2M+ subscribers).

    “Open-source software powers nearly all the world’s major companies. This software is freely available, and is developed collaboratively, maintained by a broad network that includes everyone from unpaid volunteers to employees at competing tech companies. Here’s how giving away software for free has proven to be a viable business model.”

    Advantages of open source software

    Some of the advantages of using open-source software include:

    • The software is freely available, with less stringent licensing requirements. For every kind of paid software, there’s a free open-source software alternative with similar features.
    • Bug fixes can be implemented quickly without going through the corporate approval process.
    • The software may work across many different platforms. For instance, professional designers often use Inkscape is a cross-platform and open-source alternative to Adobe Illustrator.
    • The software can easily be audited for security purposes. Security-wise, the big win in using open source programs is that they are transparent by design. Anyone with enough technical expertise can inspect the source code and fix or report possible security issues. Some open-source companies even offer bounties for bug reports for contributing to the security of their products.
    • The qualitative shift in open source community and ecosystem. The lion’s share of today’s open-source products is created within corporate businesses. It is not uncommon for 90% of OSS project code to be written by the same employees who develop commercial software. A glance at the top corporate GitHub contributors shows the trend.
    ⭐ Featured Sponsorship: A Bad Investment or a Smart Choice?

    Disadvantages of open source software

    Some of the potential drawbacks of free software include:

    • There is no guarantee that the software will work in the user’s environment off the shelf. Firstly, there may be compatibility issues with existing software or hardware. Then, it will likely require an assigned specialist to install and maintain the infrastructure.
    • The support is provided by volunteer computer enthusiasts and not by paid staff members. Open source products are safe only for as long as they’re actively maintained and supported. More than 40% of open-source codebases have high-risk vulnerabilities, 2019 OSSRA report states. The oldest and still the unfixed severe issue was found in the FreeBSD codebase – this flaw is 28 years old by now.
    • The development and support plans for the software may be uncertain or limited. Multiple factors may determine the future of an open-source project after its release. Some are impossible to predict or foresee:
    • James Kyle, a known open source JS libraries contributor, has addressed the “open source maintainer burnout” effect. Sometimes the contributors abandon the projects after constant discouraging criticism of their work. Overall, about 16% of open source projects become abandonware. 59% of these projects never attract new core contributors to get recovered.
    • Increased security risk. Even the widely used and well-supported open-source software may contain security exploits. A good example is QEMU  – an open-source VM solution integrated with many leading cloud-based services providers. In 2015, a significant vulnerability was discovered in the QEMU code. The exploit went unnoticed for the prior 11 years and traced its ancestry back to floppy disks.


    Wrapping up, both commercial software and open-source software have their advantages and pitfalls. The benefits of commercial software include support guarantee, timely updates, and patches.

    While being free and customizable, open-source business software comes with hidden costs relating to maintenance, training staff, and security risks.

    Regardless of the licensing type, most good practices involve professional developers who can set up and fine-tune the environment tailored to specific business needs. If you need professional advice, don’t hesitate to contact our experts.

    Tags: benefits, business, commercial, development, drawbacks.

    Lou photo
    Back in 2013, I founded Echo with the simple business idea: "Connect great tech companies around the globe with the brightest software engineers in Eastern Europe." We've employed hundreds of talents so far and keep going.
    Lou photo
    li profile Lou Reverchuk

    IT Entrepreneur

    Notify of

    Newest Most Voted
    Inline Feedbacks
    View all comments
    6 years ago

    With the many advantages of the open source software, I still prefer a commercial license due to the full rights of ownership most of them grants and other great benefit that comes with it such as the free support, updates, bug fixes and revised documentation as new product versions are released.

    Hugh Sellers
    Hugh Sellers
    4 years ago

    I used to avoid open source software but through the years, I’ve found it can be just as good and sometimes better than commercial software. I’d say 7 out of 10 times I’ll go with commercial software but open source continues to improve. As it does, more people realize it can be an excellent resource.

    Ready to grow your team?