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Onfire Glossary Term

Commercial Open Source (COSS)

Commercial Open Source (COSS) is a company model where a business builds revenue on top of an open source project. It isn't a type of software license. A COSS company might sell proprietary add-ons, managed hosting, support subscriptions or commercial licenses, while the underlying code stays available under an open source license.

The company needs the project to exist. The project doesn't need the company.

The model is concentrated in infrastructure. A 2025 Linux Foundation report, co-authored with venture fund Serena and the startup alliance COSSA, found that about 90% of COSS companies sell infrastructure software rather than business applications. So the term matters most to founders, investors and go-to-market teams selling databases, developer tools and observability products to engineering organizations.

What Is Commercial Open Source Software (COSS)?

In industry usage, commercial open source software refers to companies or business units that commercialize open source technology. Academic definitions vary, but the company-model framing dominates.

It's also a major investment area. The same report found that COSS startups raised $26.4 billion in 2024. COSS sits inside the wider business-to-developer (B2D) category, which covers any company selling to developers, whether its code is open or closed.

How COSS Companies Make Money

There's no single open source business model. Most COSS companies use one of four approaches, or mix them.

ModelWhat customers pay forMain risk
Proprietary add-onsPaid features layered on a free coreDrawing the line between free and paid without alienating the community
Managed cloudRunning the software as a hosted serviceCloud providers offering the same project as a service, or forking it
Support and servicesSupport subscriptions, training, implementationRevenue scales with headcount, and the free code may be good enough
Dual licensingA commercial license that avoids copyleft obligationsWorks only when the community contributes enough value to sustain adoption

Proprietary add-ons usually require contributor license agreements so the company can relicense contributed code. Support-heavy models carry services-like margins.

Open Core vs. Open Source

Open source describes a license that meets the Open Source Initiative's Open Source Definition, meaning anyone can use, modify and redistribute the code. Open core is a product strategy, a term Andrew Lampitt coined in 2008. A feature-limited core is released as open source, and paid add-ons are sold as proprietary software.

For buyers, that often means single sign-on, audit logs or advanced clustering sit behind a commercial license.

A third term, source available, describes code published publicly under a license that doesn't meet the Open Source Definition, usually because it restricts commercial hosting or competing use.

Why the Term Is Contested

Critics call the label Commercial Open Source (COSS) a misnomer. Clause 6 of the Open Source Definition prohibits licenses from restricting business use, and the Open Source Initiative's FAQ states that all open source software can be used for commercial purposes. By that logic, all open source is already commercial.

Critics also say the label blurs licenses and business models, giving cover to licenses that aren't actually open source. License changes by venture-backed companies have sharpened the debate. Redis moved from a permissive license to SSPL in 2024, which prompted the Valkey fork, then added AGPLv3 with Redis 8 in 2025. Elastic added an AGPL option in 2024, three years after AWS forked Elasticsearch as OpenSearch.

Supporters counter that the term usefully describes how a company is funded, separate from how its code is licensed.

Go-to-Market for Commercial Open Source

In a Commercial Open Source (COSS) company, community adoption is the top of the funnel. Developers download packages and run the software in production, usually without leaving contact details. The motion overlaps with product-led growth.

The paid moment tends to come from security, scale or compliance needs. The Linux Foundation's 2025 World of Open Source report found that organizations see paid support as essential for 54% of mission-critical workloads, 43% of systems handling sensitive data and 38% of regulated-industry environments.

Community work through devtools marketing programs drives adoption. Revenue, though, depends on finding accounts where adoption has already happened and reaching the technical buyer when a production requirement shows up. For more, see this revenue playbook for infrastructure companies.

FAQ

What is the difference between open source and commercial open source?

Open source is a license status. It means code is released under a license that meets the Open Source Definition. Commercial open source describes a company that builds revenue around that code through paid features, hosting, support or commercial licenses. Commercial doesn't mean proprietary.

What is an open core business model?

A company releases a feature-limited core as open source and sells proprietary features or add-ons on top, often enterprise needs like single sign-on, audit logging or advanced scaling. The hard part is deciding what stays free without weakening community adoption or trust.

How do open source companies make money?

Most use one or more of four models: proprietary add-ons on a free core, managed cloud hosting, support and services subscriptions, or dual licensing. Paid demand usually comes from production requirements. The Linux Foundation found paid support is considered essential for 54% of mission-critical workloads.

What is the difference between open core and freemium?

Open core splits the product by license, so some code is open source and some is proprietary. Freemium splits it by pricing tier and can apply to fully closed software. An open core product may also use freemium pricing, but the two ideas are independent.

Can you use open source software commercially?

Generally, yes. The Open Source Definition prohibits licenses from restricting business use, but obligations vary by license. Copyleft licenses, for example, may require sharing modifications under certain conditions. Review the specific license and consult legal counsel for your situation, since this answer isn't legal advice.

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