Please note "free" has nothing to do with price, but with end-user freedom (to use/study/modify/share).
(example answer to your question: custom/internal software).
The parent comment is correct that free software has put magnitudes less food on kids bellies.
And yet, my and others' salaries have been paid for over six years writing free software without it ever being published publicly by its users, despite being GPL licensed.
It's true that our customer base is not very large, though.
At the same time it empowered those who could not afford to pay or could not pay (legal/geo-restrictions, DRM etc).
uh... citation needed?
How many open source companies are there? By open source company I mean companies whose each software product is open source. How many are public companies? Maybe, even just compare those to companies who's products are "open core", which seems to include most (all?) of the open source SaaS offerings.
Or look just at the largest public software companies and estimate their commoditization through open source and community participation through open source.
Indeed there are many engineers who earn a living by maintaining an open source code base. To their employer, the software is free to modify and customize and free from licensing, but there is still a cost (the developer's salary, etc.) to maintain it, so not free in the sense of cost.
Others develop and distribute software and rely on voluntary payment. But if there were no volunteers, would they still be able to produce and maintain that code? Some would, purely as a hobby, labor of love or mission. They'd still need a day job where they get paid for writing code...
"Think 'free' as in 'free speech', not 'free beer'."
When we're talking about software, "Open Source" and "Free Software" are mostly synonymous. However:
The Free Software movement concerns itself with preventing software users to be at the mercy of software vendors/providers (on things where it's technically not needed). This requires, amongst other things, (unobfuscated) source code access.
The Open Source movement has different goals, mostly non-ethics oriented, about a collaborative model of development.
It happens that these different goals meet similar requirements, and that both movements were started by hackers initially wanting source code access.
Stallman does not object to commercial software. He objects to proprietary software. You may charge for free software as much as you like.
> But at some point in the food chain, software developers need to put food on the table and send their kids to school. How does that happen if all software is free?
Support, sponsorships by proprietary software makers, donations from people who want to make a better world. Not even the technical folks have the time or would want to get the source code for software and maintain it all the time. So some dedicated person would still be working on the maintenance and improvement of the software. Free software doesn't mean one cannot sell it either. It's just that others will also have the same freedom to sell it if they invest the time and money to compile/build/distribute it.
Before anyone asks how a lone developer would find the market, that problem exists even for developers of proprietary software (mobile app stores are great examples of the huge skew in the distribution of total earnings from app sales across developers/companies).