Another way to look at this is "what software gets ripped off the most?". The high-ticket software like Adobe Create Suite is often a target as the initial price is just so high - several thousand dollars for a massive package of which you may end up only using 10% of the capability of each component. Look at the effort that Microsoft has put into their 'Genuine Windows' initiatives - does anybody actually buy Windows or Office any more? The businesses that get audited have to, but many small businesses and huge numbers of home users seem happy to use an illegitimate (or illegal) copy.
My personal opinion is that if you want to make some money from your software, do not release the source code into the public domain/open source community. There clearly are cases where selling support for an open-sourced code can lead to profitability, but IMO opening up your source code should be done to get community input. Exposing your cool code to the web loses your competitive advantage if you want the software to become a source of income.
So the current best strategy for software that I've seen is to license it. Give a somewhat limited version of the software away for free so that the user can get familiar with it without having to sign up for an account or hand over credit card details, both of which are off-putting. Once they reach a point where they are using it seriously, you can offer the option of increasing storage/bandwidth/capacity/capability#. Many online services are using this model as are iPhone apps - download 'lite' version for free, pay to activate more features.
The actual price for which you license the software is a factor of:
- purpose - how hard is the task it solves?
- target market size - how many people are face with this issue?
- market segments - are there different levels/types of user in this market? (power users vs home users, etc)
Examples:
- Anything by 37Signals - BaseCamp, CampFire, BackPack, etc. Low-end product is free, pay for more.
- Evernote. Software client is free with some storage. Pay for more.
- DropBox. Software client is free with some storage. Pay for more.
- Google Apps. Non-profit, education, low usage/few users free. Pay for more storage/availability/commercial users.
# If paying unlocks some capability, don't put that capability in the free version as it will get cracked - regardless of how much market penetration you get. There are some people who just love to subvert software protection mechanisms and several of the products I've worked on over the years have had this fate - even the niche stuff. I'm no expert, but a combination of a uniquely-identifiable downloaded version that can be black-listed if it 'calls home' from more than X different IP addresses may be a starting point. If you detect someone has been handing around their copy of the software, you have a few options - talk to them (if they are registered) as there may be a good reason (they reformat their PC regularly, etc), close their account (with notification as to why) or bill them accordingly if you have their credit card details (but expect recourse from this action).