We go out one-on-one a lot (movies, dinner, etc.), we've been known to cuddle, we flirt with each other, we have sex, etc. Basically, we do a lot of things that couples do without actually being a couple. One of the main reasons we're not dating is because neither of us want to be in an exclusive relationship right now.

Do you both have other partners at the moment? Is non-sexual exclusivity a working part of the current relationship or are you both already sexually exclusive with each other already and this is instead a commitment issue? (I'm hardly one to begrudge anybody their commitment issues.)

This person means the world to me, and I'd like to be with them. I completely understand not wanting to be exclusive, as I'm not entirely sure how I feel about that either.

It sure sounds like you want to take the next step and have an "official" relationship, but you should be entirely sure about whether or not you're okay with it being open before bringing it up.

If your friend feels the same way, good for both of you. But you'll have to ask him. If his concern is about more than sexual exclusivity, then there's probably going to be some hiccups in that conversation. You may wish to determine that before having the "can we make this official" talk.

Should I go ahead and ask them? Or is an open relationship a bad idea in general?

An open relationship is not a bad idea in general, both people just need to be on the same page about what is and is not okay. That takes a lot of communication.

Whether or not you ask is up to you. What do you stand to gain if he says yes (increased romantic gestures and emotional investment)? What do you stand to lose if he says no (either nothing, or an alteration to the relationship you have now)? How likely is it that he'll say one or the other (does he want an increase in romantic gestures and emotional investment)?