The main question that usually comes up when starting an open-source hardware business is the following: how am I going to make money with it ? Indeed, open-source hardware is commonly associated with the idea of everything being free. And this seems to be in total contradiction with the idea of running a profitable business. Of course, there is the obvious way, which is to design, build and sell your own product. But in this article I will show you that there are many ways to make money with a business based on open-source hardware.
Of course, the first way to make money that I have to mention is to create your own product. Which means designing a product, manufacturing it in a factory and selling it to your audience. First, let me talk about the the typical argument against that way to make money. Because it’s all open-source, there is a chance that people will just take the design files from your website and make the product themselves. Or worse, some other guys living in countries where manufacturing is cheaper will just steal your design files and produce & sell your own product, but for much cheaper.
This is a valid argument, but in practice it doesn’t happen that much. Most of your audience don’t want to build the product themselves, especially if it’s a complicated one to build. Sure, they will use the files that are available for free to get insights on your product. They might make minor modifications, or use it as a base for another product. But only a few of them will build it from your design files. Also, even if another manufacturer is building your product for much cheaper, it will usually be at the expense of quality. And that will only help to build your own brand, according to DIY Drone’s CEO Chris Anderson in his book Makers: The New Industrial Revolution.
Back to the product creation, you will find a lot of articles and resources on this website to design, build and market your own product. Yet, even if it is the most straightforward way to make money with an open-source hardware business, it is also the most difficult way if you are a beginner. It usually requires a lot of efforts and investments before you have anything to sell, even if crowd funding platforms can help a lot on the last point. This is why I also advice to look first at other ways to make money if it is your first business.
Instead of making your own product starting from zero, another way is to build accessories or add-ons for already existing products. The most common example would be Arduino shields, which are add-ons boards for the Arduino platform that add functionalities to Arduino projects.
Even if it also involves design & manufacturing, as for the creation of your own product from scratch, this way of generating money is much simpler for several reasons. First, the product that you aim to create is generally much simpler to design than creating your own product. Wether it is a 3D-printed case for a BeagleBone Black or an Arduino shield, it limits the number of components and design efforts.
You are also guided by the products you are creating accessories for. Again, creating a shield for the Arduino platform requires that you follow the specifications of the Arduino board in terms of size & IO pins. Manufacturing is also easier for the same reasons: usually manufacturers are used to produce Arduino shields for example. Finally, and the most important, marketing & sales are also so much easier when it comes to accessories & add-ons. You are creating a product for an already proven market, so you don’t have all the hassle to create an audience in a completely new market.
Running a business based on the open-source hardware model doesn’t necessary require to sell physical products. You can perfectly propose your knowledge as information products, like tutorials or eBooks. This is actually the model that I am currently using for this website. Before I had any products to propose to my audience, I shared my knowledge on home automation & open-source hardware via a series of tutorials. All this is available on this website, for free. This allows you to create a community around your ideas and your craft, and to get trust from your audience. This is for example also what Chris Anderson did with his community about open-source flying drones, DIY Drones.
Then, when you have created a community around your craft, you can think about proposing paid products. These products can be books that organise the ideas and projects found in your articles in a structured manner. You can also use affiliate links (for example via Amazon) to gain a commission on the products and components you feature in your articles and tutorials.
You don’t need to have a business to start making money if you are interested by open-source hardware. Sharing your craft online and providing value to your community can draw some attention on you. And that is a good way to get high quality proposals for consulting work from companies all around the world. These proposals can be for freelance writing, circuit design, software development … For example, I am regularly writing guides for the open-source hardware company Adafruit.
Finally, the last one is something I have never tried myself, but some people mentioned it on the web so I had to share it with you. Open-source hardware, the hardware revolution & the maker movement are closely related with hackerspaces. These are physical spaces where members can meet up and use all the equipment (soldering iron, measurement instruments, 3D printers, CNC machines ….) in exchange of a monthly fee. This definitely requires a significant upfront investment if you intend to start a new hackerspace. But it is also an idea on how to make money with open-source hardware in mind.
We saw in this article that there are many ways to start generating money for a business based on open-source hardware. If you are just getting started as an hardware entrepreneur, I would really recommend to start with either launching an add-on for an existing product like an Arduino shield, or starting by educating your audience about what your craft is. Even better, for a successful business I really recommend mixing several of these ways to generate income so you can propose more value to your audience, and you don’t end up depending on one of them only.
And you, what is currently working for your hardware business ? Or what do you plan to use for your upcoming business around open-source hardware ? Please share in the comments!