Reselling SaaS vs Hosting Open Source for Clients

For a practice with a client list, the practical difference is this: reselling a closed SaaS product is instant to start and someone else’s to run, but your margin is a markup the vendor sets, your cost rises with every seat your client hires, and the vendor can reprice, sunset or sell direct at any time. Hosting open-source software has no seat licence, no vendor in the middle and margin that widens as your client grows, but somebody has to run it. Which is right depends on how central the software is to your service, and whether the running is solved.

Here’s the comparison in full, including the rows reselling honestly wins.

What each one is

Reselling SaaS means placing your client on a vendor’s product under a partner agreement: the vendor runs everything, you take a margin on the seats and usually the support burden. Hosting open source means your client runs their own copy of software whose code is public and free to run, on infrastructure you provide or buy, with you as the supplier of record.

Where reselling wins

• Starting is instant. Sign the partner agreement, add the client, done. There is no hosting decision at all.
• Nothing to run. No provisioning, no patching, no backups, no 2am. The vendor’s ops team is included in the deal.
• Polish and integrations. Big closed products often have the slicker interface and the longer list of ready-made connectors, and clients notice both.
• Vendor marketing pulls demand. Their brand does some of your selling, and their certification badges are worth something in a tender.

If the software is peripheral to what you do and the client is small, reselling is often the sensible call, and pretending otherwise would be marketing.

Where hosting open source wins

• Margin doesn’t shrink as your client grows. A per-seat product costs you more with every hire your client makes; an instance costs the same. The service is worth more to a growing client and costs you nothing extra to provide.
• No vendor can reprice you mid-contract. You are not carrying someone else’s annual increase in front of a client who signed with you.
• No vendor sells past you. There is no supplier with a direct sales team, your client list and an incentive to use both.
• No sunset risk. Closed products get discontinued or “migrated”; open-source software cannot be taken away from your practice.
• A real exit, both ways. Standard formats and portable data mean a client can leave and so can you. That makes “you can leave with everything” a promise you can actually keep in a pitch. (This is the heart of the partner case for open source.)

Side by side

For one client of about 25 staff, per month:

	Resold closed SaaS	Open source, self-operated	Open source, managed platform
Your cost model	Per seat, per month	Servers + your engineers’ time	Instance size, flat, from $49/mo
Your cost at 25 seats	~$375 and rising	$150 to $400 in money and time	$179 (Medium)
Your cost when they hire 25 more	Doubles	Flat	Flat
Setup effort	None	A weekend, done well	About ten minutes
Who runs it	The vendor	You	The platform
Where the client’s data lives	In the vendor’s product	In their own copy	In their own copy
Who owns the relationship	Shared with the vendor	You	You
If the supplier disappoints	Migrate and hope	No supplier to disappoint	Export and move; the same software runs anywhere

The middle path

The traditional trade was stark: reseller convenience or the economics of hosting it yourself. A managed multi-tenant platform is the middle path: the software and the client relationship stay yours, and the running becomes a platform’s job at a flat price per client. That is what Kosnomos is: every client app on its own virtual machine, live in minutes, patched and backed up daily, priced by instance size, never per seat. For what “managed” should cover at fleet scale, see what multi-tenant hosting means.