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Web apps have several ways they can bring revenues.
1 - Subscription based. Charge a monthly fee for access to use the application.
2 - Ad based. Plaster ads in and around the application to make money.
3 - Support based. Give the application away but charge for customization, support, etc.
4 - Hybrid... give away a "teaser" but charge for full-featured version.
There are even more, but those are the most popular. I'm a fan of the hybrid - give an unrestricted free account with some limits on features. Then put ads in the backend for upgrading. Run specials, send emails, have splash welcome screens promting upgrade.
A lot of apps I've seen will even have all the features and the ones not included will instead go to screenshots of the features with reasons why you should upgrade. (look at 37 signals apps)
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