Open-Source vs Licensed Software

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You have two options when shopping for new software solutions: licensed and open-source software (OSS). The main difference between the two is that open-source software can be modified, while licensed software cannot.

However, just because open source is more flexible doesn’t make it the better option for your business, and you may find licensed software to be more appropriate.

Below, you’ll find all the information you need on open-source and licensed software to make the right buying decision for your business.

What is Open Source?

Essentially, an open-source solution is software distributed under a licensing agreement which permits the code to be shared and edited by other parties. This means that anyone who knows how can use and modify open-source software completely free of charge.

With the source code made accessible, users are provided greater flexibility and customisation options. You can edit open-source software to incorporate additional features and modify the interface to suit your business needs exactly. If your company values innovation and scalability, open-source software should be your preferred option.

The Open-Source Initiative works to promote the use of open-source software. Since establishment in 1998, they have approved more than 80 open-source licenses worldwide. Interestingly, these licenses tend to fall into one of these categories: permissive licenses and copyleft licenses.

The most flexible type of open-source license is the permissive license. The general rules of this license type are as follows:

  • You can do whatever you want with the code
  • You must acknowledge the author
  • You use it at your own risk

The same rules apply to copyleft licenses. However, users of this software type also need to abide by the following:

  • Don’t place any additional restrictions on the licensee’s exercise of the license
  • The source code for binary versions must be made available
  • The source code must be open and available under the same terms in which you got the code

What is Licensed Software?

Licensed software – also known as proprietary software – is distributed under a licensing agreement to authorised users only.

It’s the opposite of open source, as the source code is not to be shared with the public for anyone to look at or modify.

Developers are often defensive of their products and eager to preserve control of their brand, and the licensing agreements allow them to do this. Licensed software has low-security risks, as dedicated developers are the only ones allowed to contribute to the software’s code.

Main differences between Open-Source and Licensed Software


Although open-source software is technically free, there are long-term costs associated with the software type. This includes the cost of implementation, innovation, support, and investing in the appropriate infrastructure as your organisation progresses, technology evolves, and your requirements grow.

Additionally, it’s becoming more common for open software providers to charge extra for add-ons, integration, and additional services. This can, in some instances, undo any cost-saving advantages.

The cost of licensed software, on the other hand, can vary considerably depending on the complexity of the solution you want. This can include a base fee for the software, integration, services and annual licensing fees. Though the hard cost can be higher, it’s important to remember that you pay for a more customised product from a reliable name. You’ll also benefit from:

  • Improved security
  • Improved functionality
  • Continuous innovation
  • Greater scalability
  • Ongoing training and support
  • Lower requirement for technical skills


In order to evolve, open-source software depends on a loyal and engaged online community providing support through forums and blogs.

Naturally, the response time of these communities is slower than dedicated support teams from well-known brands. This means that questions may go unanswered for some time, as there may not necessarily be any experts on hand. Additionally, there’s no incentive for these communities to help – except for wanting to be cooperative.

The biggest advantage of licensed software is ongoing support, which can be imperative if you’re a user without much technical skill. This support can include user manuals and points of contact for immediate assistance from experts who are closely acquainted with the product or service.


As open-source software isn’t developed in a controlled environment, we find that security is often a concern for many.

Developers are situated all around the world, so there’s often a lack of continuity and shared direction that can counteract effective communication and collaboration. Additionally, as the software isn’t always peer-reviewed or validated, a developer could potentially implant a backdoor Trojan into the software without the user being aware of it.

In comparison, licensed software is more secure.

Unlike open-source software, a licensed solution is developed in a controlled environment by a focused team. This team of dedicated developers are the only people who can view or edit the source code, meaning that the product is heavily audited, and the risk of backdoor Trojans is considerably diminished.


As open-source software tends to accommodate the needs of developers rather than the majority of layperson users, convenience and practicality are limited.

Often, there are no user guides or manuals (as they are not a legal requirement) and when they are written, they tend to be written strictly for other developers. In other words, they’re not written for less technically experienced users.

Expert usability testing has enabled licensed software to be more practical for a wider audience. User manuals are usually on hand for instant reference and swift training, and support services ensure that issues are solved quickly. Do you want to learn more about open-source software? Find our article on Open-Source Advantages right here.

How to choose between open-source and licensed software

The pros and cons of open-source and licensed software largely depend on your team’s technical expertise – and the IT resources you have available.

Additionally, your choice will also depend on the needs and requirements of your business. Does the usefulness of a system which is completely free outweigh the running costs, security risks and lack of support that come with it? If so, then it would be in your interest to join the growing trend of open-source software.

If you, on the other hand, are part of a large business with security concerns and a need for quick support, then you may be better suited to licensed software.

Your Needs. YourShortlist.

As a key decision-maker, you’ll have to do your research before choosing the best software for your business.

At YourShortlist, our goal is to make technology procurement simple, transparent, and cost-effective by matching businesses with the right software providers.

We’re all about helping our members understand, choose, and implement the solutions that will facilitate successful growth. We manage a diverse database of over 700 software partners providing solutions in ERP, CRM, cyber security, cloud migration, HR, and more.

With the help of Your Shortlist, IT buyers across the globe have made better-informed decisions on new software, infrastructure, and managed services to improve their business.

Our non-chargeable service includes:

  • Independent buying advice on the best software solutions and providers on the market
  • A bespoke shortlist of specially selected partners experienced in implementing software for your industry
  • Partner background information
  • Free call-backs from partners with no obligation to purchase

If you’re on the hunt for new software, discuss your requirements with a member of our team.