The first question people ask about open hardware is how anyone makes money if the design is free. The short answer is that the design was rarely where the money came from. Customers pay for a working, tested object that arrives in a box, for someone to call when it breaks, and for a name they trust. Publishing the files changes some of the math, but it doesn't remove those reasons to buy.
What follows are the models that working open hardware companies actually use. Most combine two or three.
Selling finished products
This is the default, and for most companies the biggest source of revenue. You design a board or device, publish the files, and sell assembled, tested units.
It works because manufacturing is hard to copy well. A buyer could order the PCB, source thirty components, solder them and debug the result. Most won't, because their time is worth more than the margin you charge, and because you buy parts in volume at prices a single builder can't get. Your units also come with testing, a return policy and documentation that matches the hardware exactly.
The margin has to cover the work that came before the first sale. Price for design time, prototypes, certification testing such as FCC or CE where it applies, and support, not only the bill of materials. Open hardware companies that underprice to look friendly tend to disappear.
Selling kits
Kits are partly assembled or unassembled versions of a product, sold to people who enjoy building. They cost less to produce, since assembly is the buyer's job, and they fit well with open designs because the people who buy kits tend to read schematics. Education is a large part of this market. A kit with a good build guide is a teaching tool, and schools and makerspaces buy them in sets.
The trade-off is support. Kit builders make mistakes, and a good kit seller answers a lot of questions about cold solder joints.
Building a brand and protecting the name
An open license gives away rights to the design, not to your name. Trademarks are separate, and they're where many open hardware companies concentrate their legal protection.
Arduino is the standard example. Its board designs have long been published under an open license, so anyone may make compatible boards, and many companies do. The Arduino name and logo are trademarks, so those boards can't be sold as Arduinos. That's why the market is full of "Arduino-compatible" boards with other names. Buyers who want the official product and its support pay for the brand.
If you go this route, register the trademark before you're well known, write a short trademark policy that says what compatible makers may and may not say, and enforce it consistently. A clear policy makes it easier for honest clone makers to comply.
Services, support and custom work
Some companies make more from what surrounds the hardware than from the hardware itself:
- Paid support contracts for businesses that build the device into their own products
- Custom engineering: adapting the open design for a client's specific use
- Integration and installation, common in lab equipment and industrial hardware
- Training and workshops
This model suits technical products bought by organizations. A research lab may be able to build an open instrument from the files, but it will often pay the original designers to build, calibrate and maintain one, because they know it best.
Crowdfunding and pre-orders
Crowdfunding solves the cash problem at the start: you need money for tooling and a first production run before you can sell anything. Open projects do well on these platforms because backers can see the design, judge whether it's realistic, and sometimes help improve it before production.
Two warnings. Shipping a finished product is harder and slower than most first-time campaigns expect, so budget time and money for surprises in manufacturing and certification. And publishing the files during the campaign makes it possible for someone else to ship first. Many creators publish the full design at or shortly after delivery for that reason, and say so up front.
Grants and research funding
Open hardware is common in science, where funders increasingly want results to be reusable. Grant money pays for design work, and publishing the hardware openly is often a condition or at least a plus in the application. Some academic groups then spin off small companies to sell assembled instruments to other labs.
Living with clones
If your design is open and useful, someone will make a copy. That isn't a failure of the model; it's what the license allows. The question is how to keep your business healthy alongside the copies.
Companies that do well usually compete on things clones find hard to match:
- Quality and testing: a clone that cuts corners on parts often fails sooner, and buyers learn that.
- Speed: by the time a copy of version 1 ships, you're selling version 2.
- Community: forums, tutorials and responsive support are attached to you, not the design files.
- Documentation: your guides match your product exactly.
Your license choice affects this too. A strongly reciprocal license such as CERN-OHL-S v2 means a competitor who improves your design has to publish those improvements, which you can then use. A permissive license lets them keep improvements closed but may bring more companies into your ecosystem. Our license guide covers the difference in detail.
Bad clones that use your name or trademark are a different matter. That's trademark infringement, and you can act on it regardless of your design license.
What openness adds to the business
Publishing the design costs you something, and companies stick with it because it pays them back.
Customers can repair, modify and extend the product, which builds loyalty. Other engineers find bugs and send fixes. Educators adopt products they can explain all the way down to the schematic. Companies can evaluate a design in detail before ordering in volume. And for a small team, the reputation that comes from openness is a kind of marketing that a closed competitor can't easily copy.
Some companies also certify their open products with the Open Source Hardware Association, which gives buyers a quick way to check the claim. See our certification guide for how that works.
Picking a model
Start from your product and your buyer. A consumer gadget lives or dies on finished-unit sales and brand. A niche scientific instrument may do better on services and custom builds. An educational board fits kits and bulk sales to schools. Whatever the mix, plan to be paid for the parts of the work that the files can't deliver on their own: manufacturing, testing, support and trust.