How to Monetize an Open Source Project: Freemium, Open Core, and License Gating

Open source projects with paying customers are possible. The freemium model -- free core, paid features -- works for developer tools when the boundary between free and paid is drawn correctly. Here's how to structure an open-source project that generates revenue. The Freemium Boundary The line between free and paid determines everything. Draw it wrong and you get: Too restrictive: No adoption. Nobody uses free, nobody upgrades. Too generous: Lots of users, zero revenue. "We use the free version and it's great" kills your revenue. The right boundary: free covers the use case that creates awareness, paid covers the use case that creates value at scale. For a CLI tool: Free: single project, local use only Paid: multiple projects, team sharing, cloud sync, CI/CD integration For an API/MCP server: Free: top 100 tokens, 100 queries/day, basic endpoints Paid: all tokens, unlimited queries, advanced analytics, webhooks For a component library: Free: core components, MIT license Paid: premium c