Freeware Software Sales Model

Whizzo

Ok, so I am wondering if anyone has experience with the freeware sales model and can explain how these companies make money.  Ad-aware is a good example for this model.  They have a free anti-spyware product and then they have a professional version that they sell.  Obviously the free version does not have everything that the pro version does, but it`s still pretty good.  I see lots of companies that do this, Antivir, AVG, etc.  In fact, I think the free AVG is the same product as the paid AVG and they just offer better support.  So what I am looking at is how they are converting people from their free version, if at all, or what this sales model really looks like.  Does anyone here have some experience with this model and can enlighten me as to the pros and cons of this strategy?  Thank you.

SilenceDogood

We sell a shareware educational game.  We provide a fully functional version for free but it has a nag (buy me reminder) screen.  That works well for us.
One thing with shareware or freeware is that by offering such one can get lots of incoming links to a site for free or cheap from many shareware / freeware sites (tucows, CNET, and 100s of lesser known shareware directories - I only pull from these from DMOZ).   Most shareware (freeware) sites use a common definition file for listings (PAD xml file) which makes submissions to lots of directories easy.
If I ever discontinue selling the aforementioned product I will continue to provide it as freeware.
So, it can raise awareness of other products / services and increase site traffic.  It can generate sales for other things you offer.  Do you think Ad-Aware would be so well known had they not offered a decent free version?  I bet not.
You might want to check out the Association of Shareware professionals if this is something you are really going to get into.  asp-shareware.org
Sidenote: Most freeware is worth exactly what you pay for it.