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The reasoning might be to get them used to your software/business/... to have them as customers later on when they will pay the full price.

For example Autodesk [1] allows students to get licenses for nearly all products for free but doesn't allow commercial use. Once they go into the business they have a few years of experience with Autodesk software and will probably stick to it.

This is the same for fogbugz (who also have a free startup edition - 2 ppl limit) and others.

[1] http://students.autodesk.com/



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