As an open source author I need to admit that it is virtually impossible to give away everything without any price. "Price", in my perception, does not necessarily mean "money". There are many benefits you may gain from working on software, and money is only one of them.
But first of all, let me re-iterate the FSF's "freedom vs. free beer" argument, in which I fully believe:
"Free software" is a matter of liberty, not price. To understand the concept, you should think of "free" as in "free speech," not as in "free beer."
This is very true. In my personal mind, I would really love to give away any work I create to those that need it. But that thought involves some subtle issues. One prominent problem is that other people may think differently. For example, my landlord doesn't like this idea. Nor does my bakery. Not even the computer manufacturer, on whom's system I develop my software! What a shame! So if I gave away everything for free, I would, thanks to the social security system, probably not die, but I would definitely not have a machine to create those things I would like to provide for free.
So it looks like I need to make a compromise, give away certain things and charge for others. One approach would be to quit computing as a profession and become a gardener instead. In my spare time I could then program and give away everything for free. The bottom line is that I could program much less than I can do currently. Also, I prefer programming over gardening. So this does not look like a good approach - neither for me personally (the then-unhappy gardener) nor for society at large (who can no longer gain the full benefit of my work: believe me, I am far more productive as a programmer as opposed to a gardener...).
So this seems to be the wrong approach. It naturally follows that I need to charge for some of the computing work I do.
Then, look at my motivation as an open source developer. I'd like to make the world a little bit a better place, providing useful tools. And, if I am honest, I may even like to get a little bit of fame as a recognized open source developer. I guess that motivates many, but few admit to it ;) This hits a sweet spot of "payment": being recognized feels good and thus it keeps me motivated. Seeing the project grow and spread also motivates me. Projects where there is no feedback and which do not grow are usually quickly abandoned. Why? Because not even the most basic "payment" is provided in exchange for the work done.
So a very important form of "payment" to open source authors, at least in my point of view, are contributions to the project, help in spreading news about it, and, (very, very valuable) good bug reports. Everything that helps push a project and make it evolve. Of course contributions in any form are also happily accepted (be it software, hardware, book, ...., and of course money). Money is not evil. It pays the electricity to run my machine, among others.
Taken the arguments together, there is no ideal world where I can give away everything and receive in exchange whatever I need (and, I barely remember, experiments in trying this failed miserably...).
With that on my mind, I begin to divide the world in "friends" and "foes". Friends are those that provide me with some form of "payment", that is anything that is useful for me. Good examples are the folks that write the open source software *I* use (aha, this is cyclic!), folks that provide good bug reports and try out development versions etc. Any activity that I can also use to my benefit makes you my friend.
Then, there are "foes". That world probably is too hard and maybe should be re-phrased as "non-friends". But the term and the idea is well known.
If you are not my friend, you do not contribute anything that I can use for my benefit. This doesn't mean you are a bad guy. If you and I do not have anything in common, why should you do something that benefits me? There are far more people that I never provided any benefit to than there are people where I did. I guess that is true for almost all of us except a few outstanding people (which then usually receive admiration as a sort of "payment").
But if you are not my friend, you should not expect from me that I do anything for free for you. Envision a stranger comes to your home and asks you if you would like to help him build his home. I guess you will be astonished and probably ask "Why should I do that?". Now assume the sole answer is "Because that is good for me, the stranger, but you need to bring your own clothes and tools and need to pay the gas to come to my home". Would you be willing to help that guy out? I guess, the answer would be "no" in almost all cases.
So why should I as an open source developer create software for or otherwise help a non-friend? Why am I supposed to say "yes, of course" if a stranger asks me "Can you implement this and that, but you need to pay for your own hardware and the electricity used and also for..."? The answer is: I am not! So don't silently expect me to do that.
Of course, the question itself may have made you my friend. How come? Simple: the idea you propose may be a very useful idea for my project. If it gets implemented, it will help many of my currently existing friends and it will eventually help spread the project. So by providing the idea itself, you did me a big favor, which one may consider as a form of "payment". Consequently, I often implement things asked for by complete strangers. And I often try to help out complete strangers on the mailing list and on other support channels. Here, I often learn a real lot about what is good and bad about my projects. This is a very valuable for of "payment" for me.
HOWEVER, and this is my personal limit, whenever I am asked to do something for free, I evaluate *my* benefit in doing so. Of course, this includes the benefit to the project and the benefit to the community at large, but this all goes into the picture of "my" benefit as the sum of all that.
So if a complete stranger asks me to do something, I check for immediate benefits in doing that. Sometimes, there are cases where I can see a benefit, but only to that stranger. Usually, these are things corporate guys need, and they are very special and non-generic. If there is no benefit at all, I simply do not look any further. Of course, the proper solution here is that those folks can actually pay money to make me implement whatever they need. The logic behind this is that when they pay money, the help fund activities that also benefit the project at large. But if they are corporate guys, and they do not get any money approved for what they (think they) need, they don't really need it at all! Because if it were really useful for there corporation, they would have received the money grant (corporations are very good in making these trade-offs, though they occasionally fail ;)). So in short, the money is even a filter that prevents me from spending time on things that nobody really needs!
If a friend comes along and asks me to do something, I still need to evaluate the request. But I am much more likely to implement the functionality requested (its a game of "give and take"). Of course, I need to evaluate the overall priority for my project here, too. But friends definitely receive a priority boost if at all possible. And I think this is only fair.
In general, I favor requests that are useful to the community at large over those that are only useful to a small subset of it. I tend not to implement without any form or "hard" payment (hardware, money, a nice vacation on Hawaii... ;)) anything that is only useful to a single commercial organization. For example, why should I provide free services to a company that expects me to pay, e.g. the utility bill? If you do not give your services to me for free, don't expect me to give my time for free to just your benefit (think about the "stranger asking for my help on building his home" analogy).
My thoughts my sound very material, but in fact they just describe on what I think is fair in the non-perfect world we live in. Remember that most non-profit organizations are my friend, because they offer useful service to "me" (as part of the community). And think about my thoughts in the intro of this blog post about my inability to do any useful work at all if I would NOT have a somewhat material point of view. So, honestly, I think my philosophy here is not actual "material" but rather a result of how life is...
Edit: it may also useful to have a look at my blog post "work, friends and personality", which looks at a very similar issue from a slightly different angle.
The philosophy also influences priority decisions in my open source projects, as outlined for example in "rsyslog work priorites".