Last updated on Thursday, 3, July, 2025

Open Source vs Proprietary SaaS: What are the differences, advantages & disadvantages?

Software-as-a-Service (SaaS) has become the cornerstone of much modern-day business activity. From CRM software, project management software, to marketing suites, SaaS solutions are being used in nearly every sector. However, companies need to make a crucial decision: open source or proprietary SaaS?

Information regarding the open source to closed source model is key when selecting the perfect investment. Both contain certain pros and cons that can affect customization, flexibility, support, cost, and long-term growth. This article provides an extensive SaaS software comparison to help you make the right choice.

What Is Open Source SaaS?

Open source SaaS is cloud software written using publicly available source code. Businesses can learn, modify, and host the application on their server. The procedure is popular among developers and technically savvy teams who need to have greater control.

Transparency is the largest open source software benefit. Since the code is available, organizations can audit the code for security vulnerabilities, modify features as per their need, and contribute to future software development.

The majority of SaaS open source platforms are open source and are licensed under MIT, GPL, or Apache. They are put under different SaaS licensing models that offer free or altered use depending on meeting their terms.

What is Proprietary SaaS?

Proprietary SaaS is software owned, hosted, and created by a vendor who retains full control of the code. The product is accessed by subscribers and is delivered in its entirety over the web. Neither do they have ownership of the source code nor low-level modifications.

Proprietary SaaS applications can include pre-packaged functionality, an easy-to-use interface, and technical support connectivity. Maintenance, data security in proprietary SaaS, infrastructure, and software updates are vendor-responsible, offering a hassle-free one-stop solution.

This is the optimal path for companies that want simplicity and stability, especially when in-house development skills are not immediately available.

Key Differences Between Open Source and Proprietary SaaS

There are some proprietary software limitations. The most significant difference is customization and control. Open source provides the complete freedom of the codebase, whereas proprietary software locks the users into a single product. In the matter of customization, the customization in SaaS is significantly stronger in open source systems since developers can customize the platform to precise specifications.

Open source platforms are more technically demanding to install, administer, and grow. Private platforms don’t have to be used straight from the box, however, and are appealing to businesses that value simplicity over highly customized solutions.

Also, pricing models are diverse. Proprietary SaaS features is sold on a subscription basis that may include support, hosting, and maintenance. Open source SaaS may be less expensive to start with, but may require ongoing support and external maintenance.

Advantages and Disadvantages of Open Source SaaS

Advantages

One of the best open source SaaS advantages is that it gives control to you. You can deploy the platform on your hardware, personalize code to fit your business processes, and create custom features not found in mass-market offerings.

The cost of SaaS platforms is generally lower with open source since you lack ongoing vendor licensing costs. This is fantastic for startups or businesses walking a tightrope.

Open source also gives you the maximum open source flexibility; you’re not locked into a vendor’s roadmap or ecosystem. You decide what to upgrade, when to upgrade, and how to take the platform forward.

Disadvantages

Despite open source software benefits, it requires in-house technical expertise. Installation, upgrades, and debugging are difficult to accomplish without a capable development team.

Support typically occurs via web forums unless you shell out money for expert support. User interfaces can’t match proprietary ones, and documentation is a chance.

Pros and Cons of Proprietary SaaS

Advantages

With proprietary SaaS, the app software company does everything, from hosting and updates to security and backups. The whole deal is attractive to firms that desire reliability without servers to maintain or developers to retain.

Easy-to-use design, easy onboarding, and instant customer support access are standard on most platforms. Properly secured proprietary SaaS is a benefit as well because the vendors spend a lot of time protecting data, compliance, and threat blocking.

These choices are perfect for those who need to go fast and do not have the technical burden of open source platforms.

Disadvantages

A major downside is lack of control. You can’t alter the way the software is behaving outside of what’s in the settings. Such restrictions on proprietary software constrain innovation, especially for organizations that need specific process specifications.

Another problem is SaaS vendor lock-in. Your business is locked into a single vendor, who can raise price, change terms, or shut off features. Changing to another solution later on is expensive and labor-intensive. 

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Deciding Between Open Source and Proprietary SaaS

You still get to pick the model that’s appropriate for your company. If your company wants control, customization, and innovation, then open source would be the appropriate selection. It supports extensive configuration, can handle special workflows, and avoids licensing danger. You also get to make the platform decisions according to your internal standards.

If convenience, speed, and total vendor support are paramount, proprietary SaaS is probably the answer. It’s ideal for teams that need to “plug and play” without care about code-level changes or infrastructure. For companies with shallow technical depth, convenience and scalability of proprietary products are hard to beat.

Scalability of open source SaaS will be heavily dependent on the quality of how it’s hosted and built. Installed properly, it can scale to SaaS for enterprises loads. But it does not happen automatically. Proprietary solutions, however, scale with you day one.

Conclusion

There is no one-size-fits-all approach for anyone in the open source vs closed source SaaS conversation. Instead, it’s just a matter of your business model, budget, internal capability, and road map forward.

If you need something you can install, build on, and deploy wherever you wish, then open source offers uninhibited freedom. If your utopia is a lovely product with guaranteed support and little to no config, then proprietary SaaS delivers that type of experience.

Either approach, though, demands evaluating your decisions from a long-term perspective. Look at licensing, support, data ownership, vendor management, and infrastructure prior to leaping. Your SaaS solution has to ultimately serve your business objectives, whatever they may be: innovation, security, or reducing costs.

FAQs

1. How does open source SaaS differ from proprietary SaaS in enterprise deployments?

Open source SaaS is gaining traction for businesses that need more flexibility, especially in regulated or sensitive data markets. As much as it requires more internal investment, it gives companies control of deployment, data, and feature development.

2. What are the top risks of proprietary SaaS?

The biggest problem is SaaS vendor lock-in. Your company will suffer huge expense or face service disruptions if the vendor modifies its pricing or terms of service, or goes broke. You can’t also customize features or fix bugs on your own schedule.

3. Which one is better for long-term ownership and development?

If you are planning on long-term SaaS ownership, open source provides ownership with the right to own absolutely, and you can control cost, customize features, and achieve continuity. Proprietary software is simple short-term but limiting long-term.