Can You Start a Business Using Free Software?

We live in a kind of golden age for amateur entrepreneurs. Thanks to the plethora of online resources available to anyone with an internet connection, it’s possible to learn the basics of entrepreneurship and business ownership. And since it’s possible to build a business based on digital goods and services, such as an online blog or reselling operation, overhead isn’t as big of a limiting factor as it used to be.

Businessman using free business software

In the pursuit of starting a business as cost-efficiently as possible, millions of entrepreneurs turn to free and open-source software to manage things like accounting, project management, or even inventory management. Software plays a massive role in your effectiveness and your overall capabilities, and it’s expensive to create, maintain, and distribute—so is free software too good to be true, or can you really rely on it to run your business?

The Rise of Open-Source Software

People usually wonder if there’s a “catch” to using free software, but there are good reasons to offer software for free. Though not mutually exclusive, many “free” software is offered for free because it’s open-source. Open-source software is freely licensed for anyone to use, copy, study, and/or change for their own purposes, and the code is typically made available to the general public.

This approach is advantageous for several reasons. The fact that the code is made available to the public means that it encourages and incentivizes collaboration. It’s much easier for a community of thousands of developers to recognize a critical security flaw than it is for an individual to discover it on their own.

The creative potential of these thousands can lead to much more innovative ideas and new features than someone operating by themselves, or even in the company of a small team. Plus, open-source software is much easier to adapt and customize for your own purposes, which increases demand and overall use.

The Caveats of Free Software

As for non-open-source software offered for free, there are usually some caveats or “catches” that could justify the offering of the software for no cost:

1. Lack of expertise

In rare cases, the software is free because the person developing it doesn’t have much expertise; they may be a novice developer looking for practice and exposure, so they’re offering the software for free because there’s no use monetizing it. This isn’t a good rule with which to judge free software, however; some free software is exceptionally developed, while some expensive software is similarly designed with a lack of expertise. It often comes down to the individual product.

2. Advertising

One of the most popular ways to monetize apps and software is through advertising. The basic idea is to offer the core product, whether it’s a management platform or a mobile game, for free, to incentivize a greater number of people to use it. Then, in exchange for continued use of the product, you begin displaying advertising to the people using it. These ads range from invasive to innocuous, so it’s up to you whether this is a tolerable feature for your business.

3. Initial momentum

Some software is offered for free in its early stages, simply because they’re still working out some bugs or because they’re hoping to build up an initial base of users. This isn’t usually a bad thing; it’s often the sign of a company that wants to offer a great product, but still needs some time to perfect things or attract an initial audience.

4. Missing features

Some companies offer both a “free” and “paid” version of their software. Though individual cases vary, some companies offer a completely functional product as the “free” version, only offering extra bells and whistles in the “paid” version. The subscribers paying for the paid version are enough to keep the app going, while most users are perfectly content with the free version.

5. Secondary status

In other cases, free software is offered because it’s designed to be secondary, or complementary, to a core product. The idea here is either to reward existing subscribers with an additional free product, or to use the free product to attract more users to the paid product.

Some of these features may deter you from using the software in question, but many of them are harmless; they’re easy compromises to make in exchange for getting to use the software for free.

The Bottom Line

If you’re starting a small business or an enterprise with basic needs, it’s entirely possible to rely exclusively on free software to handle your needs. In fact, some mid- to large-sized businesses may be able to rely exclusively on free software as well.

What’s important is that you understand your current needs and do your research before finalizing your decision, so you’re aware of any potential caveats, downsides, or compromises you’ll have to make by using the software.


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