Why do some websites offer their services completely free, no upgrades?

Depends on what website it is and what the services they are providing are. Please elaborate.

Social networking, email, search engines, Wikipedia

Ohh okay thanks. Do you mean, why would they want to offer such services free of charge?

Yes.

Well, Facebook is free of charge to use. And so is Wikipedia, Google, AIM, ect. However Facebook has a value of (around) $50 billion. That means that the creator of Facebook, Mark Z., has (around) $50 billion. Tadaaaaa. Rich guy.

It boils down to one thing – the business model of these websites relies on getting as many people using the service as possible. To attract the highest number of users, the website should be free.

The strategy there is to attract a wide userbase, and figure out how to make money later. Facebook for example, grew really quickly because it was free, and interesting. Then, once it got huge they added advertising to make money. If Facebook wasn’t free, likely almost no one would use it, and they wouldn’t be able to make enough money later.

It’s to hook membership then snag advertisers ( aka profits ) later as @gggritso indicated.

Try making a pay site and you will find out. People online don’t like to part with their cash one bit. You could set up a site selling gold ingots for 1 cent a piece and people would still be reluctant to buy from you.

The advertising model works for many, like Facebook, Twitter, and Gmail. Wikipedia, on the other hand, is a non-profit based on the idea that information should be free, and that there should be an encyclopedia in which anyone can contribute but that is also free of corporate sponsorship and the strings attached. As such, Wikipedia relies on donations, which is why once a year Jimmy Wales attaches an annoying banner at the top of every page begging for donations. So Jimmy Wales does it for the ideology, not the money.

The business model for facebook is a lot like bee farming. You’re not the customer or consumer. You’re the product. Facebook provides a social networking environment for you to stick around and pollenate the site with your info while you’re communicating and playing games and what not. All the personal data they collect from you is then sold to third parties, namely ad/marketing groups and businesses that need demographic consumer data. And that’s not including the adspace they can sell on webpages too.

Google’s model has always been one of delivering advertising. They advertise on their search engine and they do it in gmail too. The more their services reach, the more potential ad revenue they can get.

Wikipedia is a non-profit organization, They survive on tax-deductible donations from users.