Comment Perfectly competitive goods and economic pricing (Score 1) 205
In market-based economies, pricing of goods depends on fixed and marginal costs. Perfectly competitive (i.e., totally equivalent goods, completely interchangable with each other) cannot be priced above the marginal cost of producing another unit of it (in the long run, at least). Generating pricing power requires differentiation.
Software that is a commodity cannot be priced above its marginal cost. The marginal cost of another OpenSSL download is about zilch. If there was an efficient market able to make micropayments, market balance could be restored. As it is now, it's a hobby activity for individuals and a cost of doing business for large companies.
I would argue that editors, OS kernels, and compilers are, at this point, commodities. Obviously commercial offerings are differentiated just enough to generate some pricing power, and that suggests that Open Source offerings at least theoretically could (dual open/commercial licenses, like Qt in the past), but I would argue this is a temporary market inefficiency.
Incidentally, the classic way to make money giving away software was to then sell the consulting services around it.