How to upgrade to the latest iMovie for free?

My iMac was bought in late 2008 and I recently updated it to version OS X 10.9.4. I still have the '08 version of iMovie. How do I update it? And why would I have to pay to do so if it is a built in app?

Note: As user Pang pointed out, the original answer contains a dead link. This answer may not be valid any more, but you can find updated information about the "Up-To-Date Program" here.

Updated link text:

Starting in October 2014, Apple announced that Pages, Numbers, and Keynote are available free with every qualifying new Mac. If you purchased a qualifying Mac that did not include Pages, Numbers, and Keynote, you can apply for these apps through the Up-To-Date Program by following the steps below.

Original answer:

iMovie costs $14.99 on the Mac App Store. New Mac computers include iMovie (and other creativity/productivity apps) for free. However, the free pricing is not offered for older Macs, as is outlined in the small print/asterisk note on this page.

* Pages, Numbers, and Keynote are free on the Mac App Store for qualifying Mac computers purchased on or after October 1, 2013. OS X Mavericks required. Downloading apps requires an Apple ID.

The small print does not include "iMovie" or "iPhoto," but it should since that is how it works. Unfortunately, this means that your 2008 iMac is not eligible for a free copy of the new iMovie — you will have to pay the $14.99 if you want to update.

Updates like bug fixes for the 2008 version of iMovie are free, so you can also choose to keep using the version of iMovie that shipped with your Mac. Just install from the media that came with the Mac or contact AppleCare to have a replacement DVD shipped to you.

Another option is to activate a new Mac with your Apple ID and simply associate the free versions of the software with your account. If you have a friend who purchased a new Mac but is already eligible to download those apps, ask if you can sign in first with your account to get those free apps.