Paul Graham is one of the wise old men of the ISV community. His article on 18 mistakes that kill startups is fascinating.
Many applications have a trial period after which you must purchase, others are feature limited from the start, but the limited version can be used indefinitely. When designing a software product, it is important to consider how non-paying users can be converted to buyers. The question of if a web application should have a free version sparked an interesting discussion: http://discuss.joelonsoftware.com/default.asp?biz.5.452748
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