The argument for open source software is often framed in vague, feel-good terms: innovation, iteration, collaboration. And all of those benefits are real, but at least for the near term, money continues to make our world go round. Fortunately, the economic benefits of open source are just as pronounced. Where once small businesses and non-profit organizations were hampered by their lack of access to enterprise software products, they can now go toe-to-toe with the big dogs using open source alternatives.

A conversation between Tim O’Reilly and Endurance International Group (EIG) founder Hari Ravichandran about how open source tools enabled Ravichandran’s success in the web hosting business got the duo thinking about ways to make the economic case for open source. Their report “Economic Impact of Open Source on Small Business”, available as a free download from O’Reilly Media, looks at case studies of open source software enabling both innovation and profit.

Using data from EIG-owned hosting company Bluehost, custom economic models, and field research, the report states that small and medium-sized businesses comprise 60% of web hosting usage, a number that jumps to 71% if non-profits are included. It also contends that hosted open source platforms such as WordPress and Drupal offer at least a 2:1 cost advantage to enterprise products.

During a talk at the 2012 O’Reilly Open Source Convention, Tim O’Reilly discussed the report’s findings] with Bluehost’s Dan Handy, John Mone of EIG, and Roger Magoulas and Mike Hendrickson of O’Reilly Media.