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I don't think GitHub's hosting of free repositories costs them that much. As you said yourself, it is just essentially free hosting so the largest cost will probably be storage (which is pretty cheap anyway now) and then the much minor cost of Push/Pull/Clone etc bandwidth and processing.

Think of it less as a free service and think of it more as marketing. I have a few free repos which I used to open source some of my personal modules; however when it came time to select a source revisioning service for work, I remembered how easy GitHub was and went with their payed service. I am fairly sure us now paying for our repositories offset itself and my and quite a few other free repositories.




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