So, Hackaday Prize Best Product category requirements require a "business plan" - I have one hour till the deadline when it needs to be published ;-) But, incidentally, profitability is what I've been thinking this year - even though I love working on this, sometimes I still have to get distracted to side projects just to pay bills and buy hardware I need for this project (and there are always some unexpected expenses, like me spilling tea on my laptop last month). Making and selling hardware is the usual way for open-source hardware&software projects to bring some revenue. However, I imagine that with ZeroPhone, it's going to be a little more tricky than that.
See, ZeroPhone software is open-source, hardware is open-source, parts are really easy to get - there's literally nothing stopping somebody from copying this project if it becomes popular enough, and selling hardware on their own. Furthermore, people are encouraged to assemble their own ZeroPhones - this is kind of the whole point of this project!
So, when there's reasearch and development to be funded, there are contests/giveaways/bug bounties to be organized - how to get money for those, when the project's IP is open-source?
The most likely starting point for me will be selling ZeroPhone boards with SMD components already on, as well as ZeroPhone kits. For many people, SMD components are still out-of-reach in terms of skill (though, in most cases, it's just that they haven't tried ;-P ). As SMD assembly is much easier for manufacturing, selling PCBs with SMD parts already on would be pretty a low-hanging fruit in business terms. As for kits - this is maybe the most obvious idea, and I might just start first experiments with this one in a couple of weeks =)
However, as I already mentioned in some worklogs, judging by the survey responses, it seems like most people won't self-assemble ZeroPhones, but instead would like to buy pre-assembled ones. It's perfectly reasonable, and I should have expected this kind of statistic before - though I'm still figuring out how it'll work with the whole "manufacturing" thing. So, that's one source of revenue - ZeroPhone assembly services. While $50 is OK as BOM cost, it certainly doesn't cover assembly and testing, when it's done by somebody else.
Then, mod boards. ZeroPhone is extensible, it has extension ports, for which you can develop ZeroPhone add-on boards - for example, my favourite is a SPI flash programming add-on. Of course, you can still use a breadboard and some jumper wires, but just inserting a PCB into a socket is so much quicker and easier. The mod boards are supposed to be open-source, of course, but, in contrast to the ZeroPhone itself, they're not meant to be easy to assemble, or have easy-to-source components - mod boards are not essential to functioning of the phone, after all. So, you can have a mod board with an I2S microphone that absolutely needs reflow soldering with some low-temperature solder, or a mod board with an obscure IR transmitter/receiver, or even some BGA chips, and you are free to sell them to an existing market of ZeroPhone users that want this or that capability for their ZeroPhone - like, an Ethernet socket =)
Also, there's the "production-optimized ZeroPhones" idea. Basically, a version of ZeroPhone that's optimized for manufacturing instead of self-assembly - and, as a side effect, is smaller, consumes less power, has some additional functionality and might even cost less - but, more importantly, it's much easier to assemble and test those. Granted, they'll be less repairable - but still repairable (being fully open-source), and hardware will likely remain modular, though unlikely in a way that current ZeroPhones are. So, if assembly of ZeroPhones will be too hard of a task for large-scale assembly, this will be the option to pursue.
Last but not least, there's the "ZeroPhone customization services". While unlikely to be very popular, and also unlikely to be as formal as it sounds, there's still a market for it, I'm sure - especially given that current ZeroPhone is modular, so if you have some additional requirements for ZeroPhone hardware that can't be covered by mod boards, you can also get by without redesigning the whole phone, but only one of PCBs - be it a front PCB, back PCB or even a GSM modem PCBs.
One more obvious idea is, of course, re-selling ZeroPhone parts, While there'll be self-assembly tutorials on ZeroPhone Wiki, there's still way to add value - that is, buy parts from Chinese vendors, test them to see that they're the right ones and work well, then sell them to people that don't want the hassle of sourcing parts from different vendors and risking getting some parts that are DOA. . Furthermore, ZeroPhone parts can be sold to people that break some part of a ZeroPhone (say, snap one of the boards in half, or damage the screen) - possibly, with a discount if the person sends the broken part back, for it to be refurbished.
Is that good enough of a business plan? Well, it's mostly about selling hardware - with that, the devil is in the details, as usual, but in general it's a tried and true way to stay afloat.