Regarding basecamp, just like anything else, someone will have a bad experience at some time. The web tends to sky those because more people write about bad moments than good ones. I used free basecamp until I saw the need for more features. I’ve used others. Basecamp is a reliable solution that works and can provide good value, and is far cheaper than others on the market. I recommend it; never had a problem.

Both come down to time/vale. How much is your time worth and what do you gain by using the solution?

Though I would separate social networks and business software, since the first category increases its value with numbers – free users generate the content and buzz.

I did pay for LinkedIn for about 6 months but downgraded back – it doesn’t offer enough to pay for (direct emails are not worth it – people treat them as spam).

Now with business software it’s a tricky situation. The percentage of paying users to the free one is usually 2% and below. It means for every 100 free users, just about 2 pay anything. Besides the infrastructure costs, there is also support (they can’t be ignored, since they may upgrade).

May be that’s why Basecamp lately did make the free account link so small that many think they don’t have a free plan anymore. And may be that’s why the service is having constant problems – just make a search on Twitter on "basecamp, slow" – you will see the picture in real time.

Now, 5pm has no free plan (I wish they would). Just a free trial. It means that if you are paying customer, there is much less emails for their support to read to get to yours. May be that’s why their email responses are so fast. But I like good support and would rather pay for it.

Now, as a user I would prefer it all for free. But in a real world, outside Google (that just uses money made on advertising to pay for everything), businesses stay in business if they make money. And they make money by providing a service for which we are willing to pay. If the value is right – makes sense to pay.

We make an App called MailCloak- it does email encryption for Gmail and google apps and several other services. Pricing is one of the hardest things we face right now (we’ve just released) because there are free alternatives (that are inferior) and SUPER expensive ($200-$20,000) alternatives, that have “enterprise class” features but don’t really do the same thing we do.

We chose to give away our “MailCloak for Mail Clients” and “MailCloak for Firefox” products so we could undercut the competition and build a strong userbase. But we also need to have a pay app, so we chose to make our pay app build on google and microsoft’s pay apps: If you are using gmail, its free. If you are using firefox its free. If you are using Google Apps (gmail + your own domain name), or Internet Explorer, then it costs money – $3.99 a month/user.

Like I said, we’ve just released, so we don’t have enough feedback on pricing, but that’s how we decided what to give away, and what to charge for.