Open source software looks free. And in a licensing sense, it is. But that zero-dollar price tag hides a complicated web of subsidies that someone, somewhere is paying.
You probably already know that “free” OSS can surprise you with operational costs. What you might not realise is just how many different parties are bankrolling the software you’re running in production—and why they’re doing it. Corporate sponsors pay developers to work on projects their competitors also use. Volunteers contribute evenings and weekends. VC firms fund startups that give away core products. And your enterprise budget absorbs the operational complexity of running it all.
This article is part of our comprehensive guide on the hidden economics of technical decisions, where we explore how zero-cost software fits into broader patterns of counterintuitive technical economics.
In this article we’re going to look at who’s really paying for open source through four types of subsidies. We’ll use Kubernetes as a case study to show how zero licensing fees can still cost you nearly a million dollars annually. And we’ll give you a framework for evaluating OSS versus proprietary options based on total cost of ownership.
Is Open Source Software Really Free?
Zero licensing cost is not zero cost. OSS comes with total cost of ownership that catches many teams off guard.
Think of it like getting a puppy—free to acquire, but with ongoing costs for care, training, and vet bills that dwarf that zero acquisition price. Research from the Linux Foundation shows OSS provides value 1-2 times its cost—meaning the benefits outweigh costs significantly, but those costs are real and measurable.
Your TCO includes operational complexity, training, DevOps expertise, integration work, ongoing maintenance, and security patching.
Take Kubernetes. Zero dollars to licence. But running it in production costs around $60K annually for infrastructure, $600K for engineer salaries who know how to operate it, and $300K for support contracts. That’s nearly a million dollars for “free” software—a pattern we explore in detail when examining how microservices infrastructure creates unexpected operational expenses.
Licensing cost is often the smallest component of software TCO. You need to budget for the total picture—not just the zero-dollar licence.
When you calculate TCO, include training, DevOps expertise, operational overhead, integration effort, ongoing maintenance, support contracts, and the opportunity cost of complexity. Then compare that total to proprietary alternatives including their licensing.
Who Funds Open Source Software Development?
Four groups subsidise OSS development: corporate sponsors, volunteer maintainers, VC-backed stewardship, and enterprise buyers.
Corporate sponsorship means companies pay developers to contribute to strategic OSS projects. Google funds Kubernetes. Red Hat employs Linux maintainers. Why would companies fund software their competitors also use? Strategic positioning. They get ecosystem influence, attract talent, shape standards, and reduce collective vendor lock-in.
Volunteer labour provides a subsidy through unpaid developer time. Maintainers contribute evenings and weekends, representing opportunity cost that would otherwise command market rates.
VC-funded stewardship works differently. Startups employ OSS maintainers while building commercial products around a free core. The venture capital subsidises development until the commercial model scales.
Enterprise support contracts close the loop. Companies purchasing support fund ongoing development while getting guaranteed SLAs, security patches, and professional services. You’re not paying for the software itself—you’re paying for the promise that someone will answer the phone when production breaks.
Fiscal sponsors like the Software Freedom Conservancy, Apache Foundation, Eclipse Foundation, Linux Foundation, and Open Collective provide infrastructure for projects that don’t want to set up their own nonprofits.
For Kubernetes specifically, the CNCF coordinates funding. Google created it and continues contributing. Thousands of corporate developers contribute on company time. And volunteer maintainers fill gaps in evenings and weekends.
The fragility shows up in the numbers. Only 20% of respondents have open source program offices, leaving most organisations without formal OSS strategies. At least 50% of foundations lack resources to ensure regulatory compliance. The infrastructure supporting OSS is thinner than it appears.
What Are the Hidden Costs of Using Kubernetes?
Kubernetes solved many problems while introducing new complexity.
Teams are increasingly asking if Kubernetes is still the best tool for every job. That’s because operational complexity creates costs that zero licensing doesn’t capture.
Start with infrastructure: around $60K annually for a typical enterprise deployment. Add engineer salaries: $600K or more for a team that can actually operate it. Then support contracts: $300K for someone to call when things break. Total: nearly $1 million despite the free licence.
The hidden costs multiply from there. Training and upskilling your team. Operational overhead for monitoring, upgrades, security patches, troubleshooting. Integration complexity with your existing systems. Ongoing maintenance that never ends.
The skills gap drives costs higher. Shortage of Kubernetes expertise means high salaries and consultant fees. Your hiring timeline stretches. Your existing team needs months or years to become productive.
Bare-bone Kubernetes is never enough for real-world production. You need proper DNS, load balancing, Ingress, RBAC, monitoring, operations playbooks, capacity management, high availability, and backups.
Compare that to managed container services or simpler deployment alternatives. For many use cases, Kubernetes TCO exceeds simpler options. The complexity is only justified at scale—many services, multi-cloud requirements, large teams—or when you need its specific capabilities.
When evaluating Kubernetes versus alternatives, start with a small, well-defined use case. Measure time-to-productivity. Track the ongoing operational burden. Then decide if the complexity cost is worth it for your specific situation.
How Do Corporations Subsidise Open Source Software?
Companies pay developers to contribute to OSS projects that directly benefit their competitors. Why?
The strategic rationale is clear: influence the ecosystem, attract talent, achieve competitive positioning, reduce vendor lock-in risks, and shape standards before they’re set in stone.
Google’s Kubernetes investment shows the model. They created it, gave it away, and continue funding development. The return comes from establishing Kubernetes as infrastructure standard, making Google Cloud‘s Kubernetes offering more attractive, and ensuring cloud infrastructure doesn’t lock into a single vendor’s proprietary solution.
Red Hat built an entire business model on this subsidy. Employ core Linux maintainers. Offer commercial support for free software. Collect revenue from enterprise buyers who need guarantees and SLAs. The model worked well enough that IBM acquired Red Hat.
Corporate contributions go beyond direct development. Infrastructure hosting. Project governance participation. Event sponsorship. Marketing and evangelism. Legal support. Security audits. The investment compounds.
The strategic benefit for companies is competitive advantage through commons. When you and your competitors all depend on the same infrastructure, you compete on higher-value layers. You reduce the collective burden of rebuilding the same foundational components. You hire better talent because developers want to work on widely-used OSS.
What Is the Real Cost of Volunteer Labour in Open Source?
Volunteer maintainers provide economic subsidy through unpaid labour. Calculate the market value of contributed developer time—hundreds of hours per month at developer rates—and the subsidy becomes visible.
Motivations vary. Skill development. Career advancement. Reputation building. Passion projects. Philosophical commitment to free software. These motivations create real value but they don’t pay bills.
Maintainer burnout means the OSS you rely on becomes unmaintained and at-risk. The burden is real: bug triage, security patches, community management, governance decisions, handling entitled users, dealing with harassment. It’s a job without compensation.
The economic impact shows up when maintainers burn out. Security crises emerge. Maintenance gaps appear. Projects get abandoned. Log4Shell and the XZ Utils backdoor were both enabled by maintainer burnout.
The sustainability question is whether volunteer subsidy can continue at current scale.
Solutions are emerging. The EU Sovereign Tech Fund represents government recognition that dependency on volunteer-maintained OSS is unsustainable. Corporate employment of maintainers. FOSS sustainability initiatives. Platforms like Thanks.dev, Open Collective, GitHub Sponsors, and Ecosystem Funds make paying maintainers easier.
The Open Source Pledge sets a baseline: pay at least $2000 per full-time developer you employ per year to maintainers whose software you depend on. It’s a start toward sustainable funding.
Open Source vs Proprietary: Which Has Lower Total Cost of Ownership?
The answer is context-dependent: neither is universally cheaper.
OSS advantages are real. No licensing fees. Customisation freedom. Vendor lock-in avoidance. Community innovation.
OSS disadvantages are equally real. Operational complexity. Expertise requirements. Support uncertainty. Integration burden.
Proprietary software offers different advantages. Included support. Integration guarantees. Lower operational complexity. Professional services included in pricing.
Proprietary disadvantages mirror OSS advantages. Licensing costs that scale with usage. Vendor lock-in that limits future options. Customisation limits when you need something the vendor didn’t anticipate.
When does OSS win on TCO? When you have in-house expertise, large scale that amortises operational overhead, need for customisation that proprietary won’t provide, or strategic requirements to avoid vendor lock-in. Commodity infrastructure with mature OSS options typically has lower TCO than proprietary alternatives.
When does proprietary win? When you need rapid deployment, have limited in-house expertise, require comprehensive support with guaranteed response times, or face compliance requirements that vendors can help satisfy. When support contract costs for OSS exceed proprietary licensing—which happens more often than you’d expect—proprietary can be cheaper.
The hidden lock-in with OSS is different but real. Ecosystem dependencies. Skills investment that’s OSS-specific. Operational commitment that’s hard to reverse. Integration work that ties you to specific versions or implementations.
Calculate TCO for your specific use case. Include all costs: licensing (or zero for OSS), training, infrastructure, operational overhead, integration, maintenance, support contracts, opportunity cost of complexity. Then compare totals. The answer is context-dependent—a framework we expand on when exploring how CTOs evaluate build versus buy decisions with OSS as a third option.
How Do Open Source Companies Make Money from Free Software?
Commercial OSS business models fall into four categories: open core, dual licensing, managed services, and enterprise support.
Red Hat exemplifies the enterprise support model. Give away the software. Sell support, SLAs, security guarantees, compliance assistance, and professional services. The model scaled large enough that IBM paid $34 billion to acquire it.
Open core gives away base functionality and charges for premium features. GitLab offers a free tier and paid enterprise features. The challenge is drawing the line between free and paid features without alienating the community.
Managed services let others handle deployment and operations of OSS. AWS RDS is managed MySQL, PostgreSQL, and others. Databricks is managed Apache Spark. The OSS provides the foundation; the service provides the convenience.
Dual licensing offers OSS for community use and proprietary licensing for commercial use. MySQL used this model historically—GPL for open source usage, commercial licence for proprietary integration.
Why do enterprises pay for free software? Risk reduction. Guaranteed support with SLAs. Compliance assistance. Professional services for implementation and training. Someone to blame when things break.
Revenue scale shows commercial viability. Red Hat reached billions before acquisition. GitLab went public with significant valuation. Elastic, Confluent, HashiCorp all built businesses on OSS foundations.
VC funding plays a role in many models. Subsidise development until commercial revenue scales. The bet is that OSS adoption creates enough dependency and value that conversion to paid services or support becomes viable.
Sustainability varies by model. Enterprise support for infrastructure software has proven long-term viability. Open core struggles with community tension over the free/paid boundary. Managed services face competition from cloud providers who can bundle services.
Understanding these open source subsidies helps you make better decisions about when OSS makes economic sense and when proprietary alternatives offer better value.
FAQ Section
What does “free as in puppy” mean for open source software?
Open source is free to acquire like getting a puppy but has ongoing operational costs for care, training, and maintenance—often exceeding the initial savings from zero licensing fees.
How much does it actually cost to run Kubernetes in production?
Enterprise deployments typically cost $60K annually for infrastructure, $600K for engineer salaries, and $300K for support contracts—totalling nearly $1 million despite Kubernetes being free to licence.
Should I buy enterprise support contracts for open source software?
It depends on your team’s expertise, operational maturity, and risk tolerance. Support contracts make sense when you lack in-house expertise, need compliance guarantees, or require guaranteed response times for production systems.
Why do companies like Google give away valuable software like Kubernetes?
Corporate OSS sponsorship serves strategic goals: ecosystem influence, talent attraction, competitive positioning, and reducing collective vendor lock-in by creating industry-standard commons.
What is maintainer burnout and why should enterprises care?
Maintainer burnout occurs when volunteer developers sustaining OSS projects become overwhelmed. When maintainers quit, enterprises dependent on that software face security risks, maintenance gaps, and potential project abandonment.
How do I calculate the true total cost of ownership for open source?
Include all costs beyond licensing: training, DevOps expertise, operational overhead, integration effort, ongoing maintenance, support contracts, and opportunity cost of complexity. Compare this total to proprietary alternatives including their licensing.
Is open source software more secure than proprietary?
Not automatically. OSS allows security inspection but requires someone to actually do it. Proprietary software has dedicated security teams but you can’t audit the code. Security depends more on project maturity, maintainer resources, and your patch management than licence model.
When does Kubernetes make economic sense vs simpler alternatives?
Kubernetes justifies its complexity cost at scale—many services, multi-cloud, large teams—and when you need its specific capabilities. For smaller deployments or simpler needs, managed container services or traditional deployment often have lower TCO.
How can I contribute to open source sustainability?
If your business depends on OSS: purchase support contracts, employ maintainers, sponsor projects financially, contribute bug fixes and documentation, participate in governance, or donate to foundations like Linux Foundation or FOSS funds.
What is the EU Sovereign Tech Fund and why does it matter?
Government initiative funding OSS infrastructure maintenance. It represents emerging recognition that public and enterprise dependency on volunteer-maintained OSS is unsustainable, creating new public funding model for digital commons.
Do open source support contracts cost more than proprietary licensing?
Sometimes yes—enterprise OSS support can exceed proprietary licensing for equivalent functionality. The value proposition is avoiding vendor lock-in and customisation freedom, but support costs alone may not save money.
How do I avoid vendor lock-in with open source?
OSS reduces licensing lock-in but creates different dependencies: ecosystem investment, skills specialisation, operational tooling, and community momentum. True flexibility requires maintaining portability options and avoiding over-optimisation for specific OSS platforms.
