How do software companies make money if they offer the software for free?

Question

How do software companies make money if they offer the software for free?

Answer 1

There are a number of ways software vendors may make money by offering a free product:

* By including advertisements in the software.  Advertisers pay the software vendor to have their ads included.

* By offering a feature-limited version of the software for free, and enticing users with non-free version(s) having more features.

* By offering other software products (or services) that are not free.  In this case, the hope is that curious customers will drop by the vendor web site to see what other products/services the vendor may offer.

* By offering the software for free only to certain users (e.g. non-commercial use).  Users who don't qualify for free use of the software are required to pay to use it.

* By accepting donations (accepting donations may not be legal under all circumstances).

* By building an established base of dedicated users of their free product, and then converting the license to shareware (usually, while simultaneously issuing a product update).  Users who wish to update the software will have to pay for it.  Often, when this technique is used, the name of the product changes.  (This method sometimes backfires to an extent, because users may feel alienated and angry over the loss of the product's free status.)

* By licensing their technology to other software companies.  Sometimes, free software is actually a "technology demo" or "proof of concept", with the hope that it will attract interested parties (and their money).

Answer 2

Companies that create open source software make money by providing paid support, usually to business customers. They frequently build versions with extra features or a different interface than the "free" version, then "sell" and support that version to customers. They also make money on consulting and building customized applications.

That's how Red Hat makes the bulk of it's profit: service and support on their version of Linux.

Answer 3

Buy bundling advertising in with the "free" App.  

Answer 4

They get famous.

Answer 5

Most of the time when they offer the software for free, there is a 'pro' version or something of the sort where that program will do more than the one that is free, for a price...

or, if there is not a 'pro' version, the software company is being nice, as well as hoping that you will tell your friends about it and they will go to the website that the software came from and see the advertisements that the site is offering, this will add up 'hits' the more hits on a website with advertisements, the more the site owner/runner gets paid by the company that is advertising on that website

Answer 6

some ask for donations