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How does magento profit as a company?

If the community version is 100% free and they don't take a percent fee from extensions or add ons sold

I know they charge for enterprise edition but is this the only way they earn money?

Thanks

  • Ben what did you think of my answer below? If you thought it addressed your inquiry, would you mark it as an accepted answer? We're hoping to get our percentages of answer vs unanswered questions raised as we begin the process of migrating this forum out of beta and onto our own exchange. If there's anything missing, let me know and I'll update it to address those concerns. – Bryan 'BJ' Hoffpauir Jr. Jun 7 '15 at 11:56
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First, I'd say that "Only" is a relative term...The licensing fees for Magento 1.X EE started at ~$15k - ~20k per SERVER per YEAR, with additional fees based on the amount of transactions you run through the system and other factors. In order to get an actual quote, you need to work with Magento ECG to fill out a detailed Questionnaire and it gets reviewed every year to reset the fee baselines:

Magento ECG Questionnaire-1 Magento ECG Questionnaire-2

That doesn't include consulting fees for training, certification, implementation or support agreements or partner programs either. These efforts DO generate revenues, but they are more broadly a way for Magento to build an ecosystem of developers, systems integrators, 3rd party plugin developers, etc... around which a Magento Community can thrive.

These revenue streams are important, but not significant compared to the revenues generated through enterprise licensing and managed services. Now that Magento has shipped version 2 of the platform, their business model has evolved substantially to include additional revenue streams beyond what they leveraged when shipping version 1 of the platform (basically paid enterprise licenses, support, and professional and managed services).

Beyond the core offerings included with Magento Open Source (formerly Magento CE) Magento sells an enterprise version of the software called Magento Commerce (formerly Magento Enterprise Edition), which includes many additional features beyond what is shipped in the Open Source version. Full feature list available here

The paid enterprise offerings that fall under the product grouping "Magento Commerce" generates revenue a few ways. It is available as stand-alone software for paid licensing & support like the former Enterprise Edition. That offering can be hosted on premise in your own (or a leased data center) or on a cloud platform of your choosing (assuming you take on the burden of hosting it yourself).

This core offering generates revenue with both a fixed licensing fee and a percentage fee charged against the total transactions the store handles (similar to the earlier platform 1 fees, though the fees are different).

It is also available as a managed service hosted online using a "best-of-breed" collection of cloud hosting platforms including Amazon Web Services, Platform.sh, Fastly and a few others. That version of the Magento 2 Platform is offered as Magento Commerce (Cloud) and has two base editions:

  • Magento Commerce Starter - currently starting at $1,988 / month

  • Magento Commerce Pro - currently starting at $3,417 / month

It also includes a free 30 day trial for both plans. Those prices are likely to vary greatly over time, check that link for the most updated pricing.

If this sounds a little confusing, particularly because Magento has chosen to drop the (Cloud) nomenclature from the marketing materials for these offerings, well, frankly, it is. Those two offerings should probably be more accurately referred to as

  • Magento Commerce [Cloud] Starter

  • Magento Commerce [Cloud] Pro

Magento also offers many paid add-on features, though perhaps some of them are robust enough to be considered stand-alone software solutions of their own. Whether they can stand on their own or now, all of the following most traditionally are licensed and deployed along side your Magento installation.

Almost all of the following are available ONLY for Magento 2 (with the exception of Business Intelligence) AND only for the paid enterprise offering of Magento Commerce (again excepting Magento BI and also Bluefoot CMS).

A few examples include:

  • Magento Business Intelligence - I believe this add on is available for purchase for both Magento Open Source and Magento Commerce. In addition to the base offering (called BI Essentials) there is an upgraded offering that includes additional functionality called Magento BI Pro. You can see the feature comparison on slide 22 of this SlideShare

  • Magento Order Management From their website (it's) "a real-time, comprehensive view of your customers, orders and inventory. Fulfill from the best location (store, warehouse, drop-shipper) so the customer gets their product fast and save money by shipping from the most efficient place."

  • Magento Shipping This offering is brought to market through a partnership with Temando, so I am unsure of the pricing model specifics. Temando markets their solution as a SaaS offering with monthly subscription fees starting in the $50/month range, and I expect there is a revenue sharing deal with Magento though I have no official knowledge or details on how it works at present.

  • Magento Bluefoot CMS Magento recently acquired this product from Gene Commerce and although as of this writing it is a stand alone product, Paul Boisvert, VP of Product Development at Magento, tweeted that Magento Commerce will have the Bluefoot CMS integrated as a core offering, though it will be made available for sale/licensing for Magento Open Source as well.

So they have a very real revenue model upon which their business is based.

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    Amazing answer and only 3 upvotes? :( Thank you for clearing that up Bryan. – Pablo Nov 30 '17 at 19:46
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Magento offers trainings and certification material. http://magento.com/training/overview

It also makes sense for Ebay/Paypal, the owner of Magento to preinstall the Paypal payment solution, or earn some money in preinstalling for example the Moneybookers extension.

There is also a partner programm https://partners.magento.com/English/ which brings some cash.

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