There was a lot of tools available for free in the the 90's. Both the BSDs and Linux existed.
Yes but the quality difference was bigger. And there were big gaps, eg until OpenOffice there was no decent alternative for MS Office. Most SDKs and IDEs cost money too (like the big visual studio still does)
Somehow it feels great to be paid, to pay others for the tools, like in every other profession, not so much.