What you're not considering are Dependencies and Partnerships.
It's great when companies announce "Partnerships", their marketing and legal teams spend ages wording contracts and press briefings that basically announce "We're now joined at the hip!".
What you may not realise, is that every time you choose to use a 3rd party tool you are tying yourself to that company, unlike a partnership the dependancy only goes one way (like the Marketing and Legal blurb).
What happens if they decide to cancel the product?
Or they change how it works, and suddenly it's not compatible with how you are using it?
Or they double their yearly developer licence?
Here we use lots of open source tools, while there is only "community level support" and the ramp up time may be longer than for an off the shelf tool, we consider that worth the price we're paying.
We are part of that community. If a version is released that breaks our software, we have choices, we can continue with the version we're using, and choose to maintain that version our selves. Or we can participate in the project and patch the code so it will continue to work for us.
If the open source project falls by the way side, we're still left with access to the source code, so we can continue to build and maintain that too if we wish.
We believe going open source gives us far more freedom than tying ourselves to other companies, who can (and do) change their pricing policies.
Cost-per-developer next year could be twice what it is this year. Changing to a different product could equally cost as much or more.
My two cents.
Where I work I can download the free opensource tool the minute I find it. I don't even have to tell my boss that I'm using it.
If I find a non-free tool I might be able to download a free trial, without telling the boss, but if I want to buy the full version of the tool I'll definitely gonna have to talk to my boss and he's not just gonna give it to me. I'm gonna have to motivate why I need it. He is definitely gonna ask if there are any free alternatives and "I don't know." is not a good enough answer. So if I want the non-free tool I'm gonna have to evaluate all the free tools first.
If I convince my boss that I need the tool, he's gonna send a request to another department that's in charge of this kind of purchases and he's gonna have to convince that department that our department needs the tool. Usually not a problem, but sometimes it is.
Anyway, when we tell our boss that we need something it can take weeks before we get it. Therefore it's often much quicker to just use a free opensource tool and not bother going through that process.
I imagine that other work places might have a similar situation.
Two points to consider:
First off, not everyone asking may be funded by a company.
Second, despite the time savings, ideally the salary for an employee is a sunk cost, it's already been budgeted and allocated. There very well may be "no more money".
When you look at licensing, that $300 thing is $300 for Tom, but then he can't let Joe, Frank, and Bob use it. All of a sudden, if the tool is popular, now it's even more costly. It's not like buying a stapler. And then you get back to what was ostensibly a petty cash purchase now becomes a capital purchase.
A free tool can be downloaded and used instantly (usually). Buying even a $50 tool can take a week getting the check from accounting, THEN it can be downloaded.
Finally, many times folks are looking for some little specific piece of a tool, not the entire suite. Yet they're forced to purchase the entire thing. The Whiz Bang Ka-Blammo Enterprise Tool Set when they're only interesting in the 17th bullet point off the feature list.
I'm never afraid to go to my boss at work and ask him to pay for some tools that will help to make me more productive. However, the work that I do for myself, and much of it is as complex as what I get paid for, has to be done with free or nearly-free tools. I have paid for some things where the cost-to-value ratio is really compelling, like Wing IDE for Python development. Visual Studio, on the other hand, is so expensive that I just can't rationalize the cash outlay no matter how great it is.
I certainly appreciate the rationale behind this question. If you are thinking about being a professional tools developer, you have to wonder if it is going to be possible to make any money at it. I would say that you have to very carefully consider what you charge for your products. While you can charge enterprise-class customers hundreds of dollars for a tool, and they won't blink at it, making the sale in the first place is an enormous challenge. With my startup company, we found that it took about a year to go from first handshake to getting a signature on a check. That's a long, long time when you are starving and living off of your savings.
On the other hand, if you can charge less and make it a compelling purchase for an individual developer who is reaching into his or her own wallet for a personal credit card, you can achieve the kind of decision-maker mind share that can greatly short circuit the year-long enterprise sales cycle.
A developer is paid, and generally motivated, to develop stuff.
Picking up a free library takes a bit of research, but then you can pull it in, try it, and keep doing that until you find one that fits. The process of selecting the appropriate free library/tool fits well into the developer's skill set.
In a business, you're right that it's possible to buy good tools. However, to do this you need to make a business case for the cost, and persuade your manager (and probably further up the chain too) that it's worth paying. This requires an entirely different skill set, and one which would take many developers outside their comfort zone. Most of the time, I think developers just can't motivate themselves to start down this route.
Even if "the company" might want to spend money on tools if it's cost-effective to do so, the average developer is not correctly motivated to support this company goal.
Going back to your original question, you were interested in how to sell development tools in this climate, when developers have this tendency to pick the free ones. Based on the above I see two options:
I think there's a mental block against paying for something when you can develop it for "free". I think often developer time is seen as a base cost, something you're paying for anyway, so the additional time spent developing a tool isn't seen as an additional cost, it's something you're already paying for.
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