Many of my sales guys go into the field and face the following question put to them by customers, We heard that open source is free. So why is your company charging us for it?
At this point, I tell them a small story, which they can effectively use during their next sales call. Here is what I tell them.
Tom takes his girlfriend Jenny for a date to the beautiful seaside restaurant Jimbaran Bay in Bali (Indonesia) and orders fresh lobstersthe costliest dish the restaurant offers. The sea breeze and the alcohol served in coconut shells makes them relax. The lobster arrives in exactly 30 minutes, as promised in the menu card. Jenny has never tasted a lobster before and is not sure how to eat it. Being the experienced traveller that he is, Tom helps her out with the techniques of handling the lobster. Jenny loves the lobster and enjoys the entire experience of learning how to eat it.
The waiter brings the finger bowls for the couple to wash their hands, and the bill shortly afterwards. Tom picks up the bill, stares at it and exclaims, What is this?
Sir, the bill for the lobster, the waiter replies.
What do you mean by a bill for the lobster? asks Tom.
Sir, you and your friend just ate the lobster now. This is our bill for it, the waiter continues politely.
But…I thought the lobster is freely available, Tom retorts, pointing towards the sea.
The waiter faints.
Once you narrate this incident to customers, the irrationality of their question about why they need to pay for free software becomes clear to them.
Are we not almost always paying for free things? We go to restaurants and pay for fish, which is available for free in nature. What about the gold in the ring, which you bought last week? What about the diamonds in the necklace you presented to your daughter for her birthday? What about the water in the bottle you just bought? As you can see, we mostly pay for free things. Sounds illogical? Irrational, maybe?
To understand just how illogical some peoples expectations are with regard to free software, we need to understand the supply chain involved in any product. Let us take fish, for instance. Somebody has to buy a boat, fill its tank with diesel, hire employees and send them to sea to catch fish. He then needs to price the fish in such a way that he can recover the cost of the boat, diesel, employee salaries, and make a profit for himself. Now, the next element in the supply chain would be the person who buys the fresh fish, transports it in ice and then stores it in a freezer. Obviously, this person, too, needs to add the cost of ice, employee salaries, etc, apart from his profit margin to the original cost of fresh fish. Depending on the location, there could be yet more elements in the supply chain before it reaches a fish store where you can buy the fish as an end customer.
So what does the supply chain look like in the open source scenario? Assume that a generous programmer and his community developed a piece of software for remote controls. It is not practical for the end customer to just download the software and start using it as a remote control. This is where a company can play a role in bridging the gap between the raw software and a functioning remote control in the hands of the customer. This company X understands that there is such software available, chooses a suitable hardware platform to run this software, and also scouts for manufacturers for the plastic parts encasing the hardwaresuch as buttons for the user to issue commands. It pays some amount to the hardware manufacturer, to the plastic manufacturer and so on. Finally, the company has a beautiful product in hand.
Now, the customers should become aware that there is such a product that they can hugely benefit from. Again, money has to be spent on marketing and a sales channel. The company, even if it is a non-profitable organisation, has to spend for all these activities and recover its expenses from the final product price. Also, those at company X need to set aside funds for the cost of warranties, infrastructure for support, etc. This is how free software becomes a priced product in the customers hands.
Adam Smith defines capitalism as follows: It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest. Similarily, our company X finds the software, hardware and plastics, puts it together and sells it to make profits. Also, the customer, who buys the product, at say US$ 25, feels that paying this price once is better than getting up and going to the TV to change channels 10 times in a day. Each works in their own interest to bring about overall economic gain.
It is important that companies that provide open source software understand the economics behind their existence, and educate their sales force to not feel embarassed in front of intelligent customers. Instead, the sales force must be trained to communicate and explain the economics of open source software.