Open-source software can offer its product(s) for free and sell services such as training, technical support, consulting, customization, Another open is offering open-source software in source code only, while providing executable binaries to paying customers only, and offering a commercial service of compiling and package management of the software. Also, providing goods like physical data storage, like hosting services.
Free products enable the potential for wider reach and wider use.
Services revenue is often highly-unpredictable and requires significant scaling of head-count which can leaves companies exposed when revenues shift. The margins with professional services are also much thinner than those for product-based companies.
The freeloader problem happens when too many members of a community fail to contribute their fair share to the costs of a shared resource. When building products for free or at a loss, this business model is dependent on volunteers, donations, crowdsourcing, and steady enterprise clientele to offset the cost of free software.