[JohnFen]

I think your final questions can't really be answered by people here. They take actual market research.

As a very strong rule of thumb, though, the reason why people may use a thing when it's free but not be willing to pay for it is because of the cost/benefit ratio. The product doesn't produce enough value to pay the price being asked.

The tricky part is figuring out what the cost is. It's not just money, it's the accumulation of all user costs, including ancillary ones such as, for instance, how much hassle the product brings with it.

It's also tricky to figure out what the benefit is. It's not at all rare that the manufacturer of a product doesn't actually know what the product's benefit is, and only knows what the intended benefit is.

You need to talk to actual people in your target market and gather more data to illuminate these things.