In a recent IT Conversations, Philip Greenspun talks about the economics of open source. Ars Digita, a company he founded, was built around an open source platform. He makes two interesting points about open source:

• Control of the code base and the ability to add things to the source release is one lever that a company can use to extract money from open source. Companies will pay to have changes incorporated into the code so that it doesn't have to be re-customized each time a new release is made.
• When your based on open source, you have to keep costs down because open source does not allow the margins that closed source does for a simple reason: if you get too expensive, the client will hire someone else to make the modifications to your source code.