In the licensing scheme of avast! there are two conditions which qualify the user for free non-limited usage of our avast! 4 Home:
First, it must be the home usage - so any organizations (non-profit or commercial) are disqualified.
The second condition says that there should not be any commercial activity done on the computer which is to be protected by avast! - i.e. if somebody use it to make some profit, will also do not qualify for avast! Home usage, even on the computer at his/her home.
So both conditions should be met for free program! The rules are clear: Home and non-commercial use. Alwil Software must earn some money from the rest of the user community to be able to develop and maintain their products.
Anyway, if they exclude you from the free version, you can always contact sales@avast.com and ask for some a discount there and try to get some quite reasonable price!
If I'm not wrong, for the second (and every following) year you will need the subscription which is the fraction of original price - and you will get updates for all new versions... The homepage says it all. On the first line is the price of the product, on the second line is the price of the following subscription. This subscription (called AVS - Antivirus Service) is explained lower on the page: paid from the 2nd year, includes all updates and technical support. It means that the AVS for the first year is included in the product price, after the first year there is yearly subscription which cover all updates (both virus database and program - even the major version change) and support.