Sure - but then you're not really charging $400 for the software. You're charging $400 for the services associated with that software, and a (typically significant) portion of that money will go towards funding the service, not the OSS software.

This change in how the money is allocated is a subtle, but important, distinction. Monetizing a service means you now have a minimum of two products to manage, and from my time at a company which did exactly this I've found that the OSS software development is the product which absorbs any shortfalls. It's hard to watch the budget for OSS development shrink constantly; to watch developers passionate about the OSS software being reassigned to grow the service instead.

It's probably still the best way to handle a crummy situation, but it's not what the OP described.

> The key is that I don't charge for the software as such. I charge for services, etc. around the software.

Yep. Matt Mullenweg & his crew at WordPress have been doing the same thing, and are wildly profitable at it.

It's not just about profit. It's about lifestyle.