How to keep Free/Paid version of the app separate in subversion

I think your approach to branching and merging is OK, but if the main problem is that the code base is quite unstable, that's what you need to focus on and minimise.

The primary thing to ensure is that the code base has good separation of concerns. Dependencies between various components need to be isolated and reduced. This should solve the majority of your problems. Also following practices such as single responsibility principle will help.

If a major architectural change needs to occur, it should take place in its own branch, and then merged back into main once fully tested and 'stable' (within reason). This may be painful and challenging but it also should be rare. If you have good testing practices in place then risk is minimised.

It may also help to change to a distributed version control system. This should give you a trunk that is stable, with different features merged in from different branches when they are ready. You will still have pain merging if the code is too interdependent, but you will have more control.

Looking at this from another perspective, also consider increased communication amongst your team. Run regular agile-style standup meetings. Consider where team members sit and how that can help. If a complex merge needs to take place, it may not be such a bad thing - use a pair programming approach that will give understanding to both parties.

How much (and what kind of) structure you need depends a lot on what you want to be able to do. Figure out what you can't live without, what you want to have, and what you don't care about.

A good example set of decisions might be:

Things we can't live without:

• be able to reconstruct any past release at any time
• be able to maintain multiple supported major versions of the product at any time

Things we would like to have:

• be able to perform ongoing major-feature development (for the next major release) without worrying about branch merges
• be able to perform maintenance updates to past releases

Things we can live without:

• automated backporting of changes from current work to past releases
• never interrupt major feature development even for a few days or a week at at time

If the above were your goals, you could then adopt a process like this:

1. Do all development work on the trunk of your VCS ("master" in git)
2. When you are close to a major release, halt major feature development, and focus on system stability for a week or so
3. When the trunk seems stable, create a branch for this major release
4. Major feature development can now proceed on the trunk, while only bug fixes and release preparation are allowed on the branch
5. However, all bug fixes to be made to the branch must first be tested on the trunk; this ensures that they will also be present in all future releases
6. Create a (VCS) tag on the branch when you are ready to release; this tag can be used to recreate the release at any time, even after further work on the same branch
7. Further maintenance releases to this major release (minor releases) can now be prepared on the branch; each will be tagged before release
8. In the mean time, major feature development geared toward the next major release can continue on the trunk
9. When you get close to that release, repeat the above steps, creating a new releases branch for that release. This allows you to have multiple major releases, each on their own branch, in supported status at the same time, with the ability to release separate minor releases against each.

This process won't answer all of your questions -- in particular, you will need a process in place to decide what fixes can be made to a release branch, and to ensure that bugs are not fixed on a release branch first (such fixes should always be tested on the trunk where possible). But it will give you a framework in which to make such decisions.