FWIW: Open Source client + server with optional paid hosting is my favourite. And it is not just words: I've been paying a few hosting services, both commercial and open source, for a few years.
I like the assurance of open source but I often prefer to pay the people who make it to host it.
I am thinking of releasing a product under Apache + Common Clause, Zero License, Business Source License or similar, maybe with GPL timebomb. Basically, feel free to use, improve and share, but don't sell or offer it as a service to 3rd parties. I would love it if normal users could safely use the product and share improvements, but would still like to have a chance at building a business model which didn’t involve donations or selling just support (I want to be incentivized to build a great UX). Which means I am selling convenience, and probably can't compete with others if they can offer the same without the cost of development.
Since you sound like exactly the target audience, would such a license appeal to you, or would you reject it up-front?
I think as a service provider, you have to think pretty hard about the service you are providing. Having a cloud based server and keeping it up is pretty basic work. This is exactly why SaaS is so popular -- the actual day to day service is extremely small and cheap. The problem, as you very correctly perceive, is that larger providers can undercut you, very, very easily (because you are buying the actual service from them). They can cut out the middle man.
So for a full free software service, you need to provide something other than hosting as the service. To be honest, one of the really attractive things about SaaS is that you go back to a model where you have an upfront, single time development cost for the software and then you sell it over and over and over again. In other words, you have a constant price with near infinite scaling.
I think this is impossible with free software. I might be wrong, but I've thought through it for a number of decades and I can't see a way to do it :-). With free software (that has no intrinsic hardware or extensive person-oriented service involved) I think you have to charge for actual development time. I think there are inventive ways to do this (many of which have not been tried), but there is no way around it.
I think what you are intending to offer has very little benefit for the user. Certainly, as someone who wants source code, I would not touch something with that license with a ten foot pole. If I were you, I would just go with SaaS or Open Core and be done with it. If you are really intent on providing useful source code for the user, then I think you have to come up with something that they want to buy. That thing has to be something that other people will have trouble competing against. For most programmers, that means development services.
You are of course correct - requesting a commercial license for any potential competitor will limit users' options with respect to the provider they choose. It does however grant them the option to self-host. While not that convenient, it still provides some incentive for me to try better, and is a backup plan for users if I become unresponsive. Better for users (and safer for me) than Open Core I think?
That said, the decision is not final yet, and I'm also not satisfied with any license I checked (closest is Common Clause, but what happens with snippets of code, reused in other, maybe foss projects?). Thank you!
The competition is Evernote if the software isn’t free. I feel like SN seeks convenience now. Licensing games are just another commercial competitor.
Open source is split across multiple repos:
https://github.com/standardfile/ruby-server
https://github.com/standardnotes/web