When businesses hear the term “open source” software, it often translates into another word: free. And while open source code technically is just that -- free for all to use -- it doesn’t mean that there are never any costs associated with deploying open source. To understand the payoffs of utilizing the growing array of open source applications, experts say it pays for small and mid-size businesses to do their homework on the cost analysis front.

“The philosophy of open source is more about freedom -- to look at the code, modify it, and that there’s no copyright,” says Michael Goulde, senior analyst for Forrester Research, of Cambridge, Mass. “Companies can save money on their expenses, especially if they don’t need all the bells and whistles that a commercial software package has. An open source package might have all they need.” Still, he warns that there are hidden costs of open source and small and mid-size businesses "can get in over their heads really quickly.”

Many businesses say cost is not even a factor when moving to open source. They simply pick the best technology for the job. But companies should consider the following before committing:

No. 1: Packaged open source comes with a price

Some open source software comes shrink-wrapped in a box just like commercial counterparts. For instance, Red Hat Linux subscriptions and training can cost thousands of dollars. Or SugarCRM, a popular open source customer management program, costs from $40 to $75 for the Commercial or Professional versions. It charges $855 to host and manage the application with a monthly maintenance fee. Sometimes migrating to open source -- as with any IT overhaul -- could mean that a company needs to buy new hardware. 

Still, Bruce Perens, a longtime open source evangelist and vice president at Source Labs, of Seattle, an open source provider, says most small and mid-sized businesses don’t need commercial open source products. The Ubuntu OS, for example, is not difficult to install and is free. “You can run it and not get a support contract and not pay anyone,” he says.

No. 2: Support isn’t always free

Open source communities are known for being supportive and helping with problem solving -- for free. In fact, experts say the support offered by open source communities is often better and more in-depth than commercial software companies’ “1-800” numbers. Yet when it comes to using community-developed open source applications, being able to get on-demand technical support is a concern for some small and medium-size businesses. “Support is always a concern, no matter what kind of product it is,” says Bernard Golden, CEO of system-integrator Navica, a San Carlos, Calif. systems integrator and author of Succeeding with Open Source.

In this case, businesses can hire a local company to provide open source support or to manage updates just like they might when using Microsoft Windows. Red Hat support packages for Linux can cost anywhere from $349 to $18,000. Goulde adds that small businesses should seek outside support if IT administration is not their strong suit: “When they start trying to download it themselves and support it themselves and stay on top of all the changes, that gets hard. They need somebody to guide them.”

No. 3: Consultants can cost you

True, open source code is free. But, if a small business doesn’t have an information technology staff to research, implement and maintain it, the firm might need help, Golden says. “If they don’t have a lot of tech savvy, they should find a partner or service provider who is open source aware and supportive," he says. When a vendor installs open source, it also has terms of service to stand behind. Free downloads don’t.

Perens says if a small business wants to get its feet wet, at the very least, there are free open source products out there that mimic off-the-shelf packages, such as Open Office. “The people who really needed supported open source, are the larger businesses,” he says. “If you’re getting big enough that you need support outside of your company, get it locally and find a local consulting firm that is willing to support Linux. The price corresponds with the level of support.”