We see a lot of products, wonderful and awesome products offered for free in the world wide web. We don't even care about that, because we are used to get good and interesting tools without paying. In terms of customers we take a lot, but are not willing to give.
I think that is the wrong mentality especially when it comes to software we use for work or make money with. It is absolutely understandable, that customers don't think about paying if they get all they need from the origin itself: the entrepreneurs!
If you are hard working guys with great ideas and you have put your money, knowledge and time into your vision/dream or product: why do you offer your commodity for free?
Even if there is somebody investing in your company so you actually don't have to think about money (well, at the moment), try to get a real business plan, which means you should especially think about how to earn money.
Immediately, I hear a lot of raising voices:"It is much more difficult to get people use my product if they have to pay!" -
"I can think about the finance later on! Money is not important! I do it, because I love what I do! I don't need to get paid!"
"What about Facebook, Twitter and MySpace?"
Yeah, you are right. Kind of! If you do what you love your product will be good enough to convince people that they must have it, even if they have to pay some (let it be a small) amount of money.
Remember: they don't pay for your wonderful vacation, but to support you to improve your product and your company. That's important!
And by the way: even Facebook is urged to think of ways to derive income. Twitter wants to offer pro-accounts with advertisement possibility to earn money. MySpace is struggling from a lack of assets and new ideas.
Have you heard of Ning? They were huge offering free webspace for promo-sites (Linkin Park etc). Two weeks ago they had to decide whether to throw out half of their employees and stop offering their product for free or shut down the company. Tough decision!
Summing up: do what you love, sell what you love, people will love it, support you and pay so you can go on. If not, it was the wrong idea (actually I don't think, that this will happen, if you really love what you do!!). Believe me!