I've started developing a website in ASP.NET MVC and have taken part in the BizSpark program. The only part that concerns me is the licensing cost of SQL Server Enterprise after the three year period is up.
Given this cost, and the potential outcome that this product may not 'take off'; should I rewrite the application in a 'free' platform such as Ruby on Rails or Java?
If you're a start-up that meets several conditions (most notably, less than $1 million in revenue) then you probably qualify for the BizSpark program, which basically eliminates the .Net licensing costs.
Any alleged pros and cons of .Net vs Ruby in a general sense are highly subjective. You might find one more suitable to a particular task than another but there is no general "better" or "best".
And obviously startups can (and do) use .Net. Case in point: Stackoverflow.
You can use SQL Server Express even in production IIRC. Alternatively, use ASP.NET MVC but with a free database such as Postgres or Mysql.
You're not forced to choose between "everything Microsoft" and "nothing Microsoft".
Why rewriting the app if the problem is SQL server? You can connect to MySQL from .NET.
Check out this question as well: Why is microsoft stack said to be costly?
If you are ok with using mysql as a database there is really no need for SQL server...
And if you want to eliminate licensing costs for Windows Server 2008 as well, it should be possible to run asp.net on apache (google it for more info)....
Aside from the cost of the Windows Server (which would include IIS) to host, and the cost of SQL Server for the database, .NET itself is essentially free.
The .NET Framework can be downloaded for free, and you can get the Visual Web Developer Express version of the VS development tools also for free.
Also, there's no reason why you have to use SQL Server as the back-end database. MySQL will happily run on top of Windows, and there's ADO.NET providers for it also.
If your database needs aren't huge (ie. you can happily live with a 4GB database size limit), you can even use SQL Server Express freely.
Microsoft licensing is expensive. And most of the time, I can't even find which license I actually need on the massive, confusing labyrinth that is the Microsoft web site.
Having said that, In my opinion the .NET Framework is a great platform (robust, easy to learn, good dev tools), and I've found the .NET developer community is very supportive.
As some others here have already suggested, you can run Windows Server/IIS and MySQL in conjunction, to get the best of both worlds.