A Cheapskate's Guide to a Free & Well-Rounded Game Collection
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You don't have to spend a fortune to build a diverse board game collection. With a smart selection of mostly free games, you will have an awesome collection that covers the most important properties to be found in today's games. In fact, only two of the games on this list aren't free, and even they are just $10.
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Update 3/8/10: This collection originally sought to capture all of the mechanics in the BGG database, but is now based on the properties deemed most important through discussion on this thread. I'll continue changing this list as people reply to the thread.

Update 3/12/10: Changed focus from merely cheap to completely free games. All but two are currently free.

Update 4/13/10: Refined list based on updates to the thread and the new, more efficient model collection here, eliminating some games that provided properties redundant with games already on the list.
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1. Board Game: Werewolf [Average Rating:6.61 Overall Rank:1187]
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Party / Large Group Game with Player Secrets & Negotiation

Though it might seem antithetical to the culture of BGG, the most recommended requirement for a true gamer's collection is a party game. Several people mentioned it on the thread, and a small protest broke out because Blue Steel did not include "party game" as a category in his list (though he did have a "large groups" category).

Werewolf is freely available, so it can be added and subtracted from your collection at will. Primarily a party game for large groups (8+ players), it also features a number of interesting mechanics that set it apart from other party games.

Other free party games include Liar's Dice and Celebrities, but you'll want to pair these with King of the Tabletop and Free Trader to get Player Secrets and Trading/Negotiation.
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2. Board Game: Micropul [Average Rating:6.80 Overall Rank:2110]
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Abstract Tile Placement Game

Although many free Tile Placement games exist, only micropul fulfills the Abstract Strategy requirement of this two-for-one category. The top five (non-abstract) Tile Placement games are:

1. Zombie in My Pocket
2. 18GA
3. Rat Hot
4. Airborne in My Pocket
5. Cronberg

Other abstract options include Gnostica and Alien City.
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3. Board Game: Fzzzt! [Average Rating:6.26 Overall Rank:2978]
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Deck-Building Auction/Bidding Game

Although Fzzzt! is not free, it fills a unique role as one of the cheapest Deck-Building Games out there that can also stand in as an Auction/Bidding Game. Not only that, it provides an alternative to micropul for a Fast/Filler Game. There really aren't any alternatives to this combo, cheap or free.
 
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4. Board Game: Egyptian Ratscrew [Average Rating:5.55 Overall Rank:13034]
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Dexterity Game That Works for Large Groups & Kids

This classic from my teenage years shows up again as one of the only free and ranked Action/Dexterity games out there. I personally prefer Spit, but the Action/Dexterity in that game is optional. You can play either with a traditional deck of cards.

Reiner Knizia's Decathalon is an alternative Kids Game that's free, but doesn't hit on the other properties that Egyptian Rat Screw does.
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5. Board Game: Valor & Victory [Average Rating:7.72 Overall Rank:3123]
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Wargame

It seems hard to argue that any gamer's collection is complete without at least one good old wargame, and Valor & Victory provides this classic game type for free. Dozens of voters give it an average rating right around 8/10; while there aren't enough voters to promote the game's rank very high, that average rating is still admirable.

Wargames supply a phenomenal number of Print-and-Play games, about 20 of which are ranked here on BGG. The top five after Valor & Victory are:

1. Canvas Eagles
2. Cold War Naval Battles
3. Battle for Armageddon
4. Panzer Grenadier
5. Sword & Sail
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6. RPG Item: The Pool [Average Rating:6.30 Overall Rank:7076]
 
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Cooperative Play

Most role-playing games have cooperative play at their core, and the Pool is no exception. Many cooperative board games can lack dynamism, because the game itself is a dull, unengaging opponent, but role-playing games open up a broader realm of player imagination, which can be as dynamic as it gets. The Pool takes five minutes to learn and facilitates narrativist style gameplay, ideal for telling stories. It's considered a breakthrough game from indie game developers over at the Forge, even though it has yet to garner much love on review sites.

More traditional free options here include Dead of Night, D-Day Dice, and Cheese Chasers.
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7. Board Game: soft landing v1.0 [Average Rating:7.56 Unranked]
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Variable Phase Order Game

It has only 5 ratings so far, but, at just $10, soft landing is the cheapest Variable Phase Order game you'll find that doesn't suck. Not only that, it can also serve as a Cooperative Game, if you don't like the free RPG option described above, and as an Abstract Strategy Game.

(I'd originally posted Glory to Rome but some other users pointed out that it's not available for the sticker price of less than $20 anywhere, selling for more like $80+ in the BGG Marketplace.)
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8. Board Game: I, Dungeon [Average Rating:6.14 Unranked]
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Worker Placement Game

Ideally, your Worker Placement game would be a medium to heavy Euro, but such games are not going to be free additions to your collection. However, if you break this requirement in two, you can cover your bases. I, Dungeon is a free Worker Placement game for one player. It is a recent release that's garnered hardly any ratings but those it's gotten so far are solid.

For an even less heralded but multi-player (and free) Worker Placement game, try the Market at Kos.
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9. Board Game: 18AL [Average Rating:7.28 Overall Rank:1675]
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Medium to Heavy Game

For a heavier game, 18AL or 18GA (also free) can provide several hours of somewhat complex gameplay for a small group of dedicated gamers. In addition, 18AL provides a Route/Network Building game in the appropriate guise of a Train game for free, so you don't have to drop any hard-earned cash to flesh out this area of your collection. It also is considered an "Economic" game, which some consider to be a key component of a well-rounded collection. If you dig the game style, hit the links above to find a commercial upgrade.
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10. Board Game: 1000 Blank White Cards [Average Rating:6.70 Overall Rank:2861]
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An Alternative Party Game

I've yet to find anyone who thinks a drawing game is a must-have in a game collection, but the mechanics of this game are unique, it's the best there is at what it does, and it's free. It also provides an alternative to Werewolf and Egyptian Rat Screw for a Party Game.
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11. Board Game: Pocket Civ [Average Rating:6.67 Overall Rank:2783]
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Solitaire Civilization Game

Civilization games are far from being deemed absolutely essential to any game collection and I've yet to see anyone mention solitaire games as must-haves for your collection, but, as long as you can snag both qualities in one free game, why not? Pocket Civ is as free as they get. If you like this style of play, feel free to invest more money in the higher-ranked games at the link above or keep trying free games like Sword & Sail and Mesopotamia: Birth of a Civilization.
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12. Board Game: Merchant of Venus [Average Rating:7.17 Overall Rank:704]
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Bonus: Mechanics Overload (If You Can Find It)

As the comments note, Merchant of Venus is not exactly cheap, either in its original form or as a DIY project. I've included other games above that cover its essential mechanics, but, if you happen to get your hands on (or make) a copy, it could serve as a great cornerstone in a diverse collection. It includes a dizzying array of mechanics, such as Commodity Speculation (a form of Betting/Wagering), Dice Rolling, Pick-Up & Deliver, Point-to-Point Movement, and Roll & Move.
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