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Some people are making a business out of offering a hosted version of someone else's Open Source package.
Also, I agree with Adam. Even though you provide an open source version you'll need to provide a free account for users to play and see if system fits their needs. IMO, providing full service for 30 days trial accounts (full service for free) is much better than going open source.
I am glad to see you reading my blog. You were one of the inspirations for this post.
I think there is a difference between a 30 day free account and a free for life hosted account. 30 days you can write off as a customer acquisition cost. Use it in your marketing budget as a marketing cost. Maybe open source is a better move with a widespread group? But not for individual pieces of software that aren't going to get the critical mass needed to get the development behind it?