How should one think about making your SaaS open source as an indie hacker?

I am currently building a product that is a fairly generic SaaS with a focus on solving problems within a specific niche.

I am considering making it commercially open source, where there is an option to self-host and improve if desired. Think of, etc.

How does one think of this from the point of view of an independent, self-funded, bootstrapped venture? I do not find enough written about it.

I can see obvious upsides such as product differentiation, community contributions, and word-of-mouth marketing.

What could be the downsides? Will it be an issue if I want to sell it in the future?

- People may just clone your code, host it themselves, and stop paying
- If it's a popular project, you will have to triage a bunch of issues people file in the GitHub, review PRs from the public, and so on. It's a lot of effort for very little or zero reward in some cases

However, I think it makes sense for certain types of products:
- Analytics
- Security
- Privacy

Basically any situation where you need to establish significant trust with the buyer where they might be skeptical of your work or suspect that you're stealing their data. I'm likely going to do this soon with #simpleotp to build more trust.

One way I've seen recently is that you licence the code as AGPL, which effectively makes it unusable for corporates as they'd need to share their source code to use it. Then sell non-AGPL licences to fund the project. Of course bad actors can just ignore this too.

In terms of an exit, it may be harder yes, at the very least in the sense that you would need to find buyers who understand the why & how of the business model. Not impossible, but outside of tech circles it's not like everyone knows how OSS works.

That being said, you don't have to have it open source in order to offer self-hosting options; it's just convenient. There are plenty of paid developer tools in certain niches that give you licence keys & install instructions on how to do it yourself. Mailcoach is a great example - a 1-year licence costs a little bit more than using their SaaS option at low scale, but if you use it a lot the self-hosting makes sense.