Can i make my game free to download?

Can i package my game and make it free for anyone to download? (If so what would my legal obligations be in that case?) Or do i have to give it a price in order to comply with the 5% royalty fee rule?
Or can I do both and send it to friends for them to play it AND sell it on steam?

It’s kind of a silly question but the license agreement and legal stuff kind of scared me so i wanted to be sure.
Thanks in advance!

If there’s no revenue, then there is no royalty owed. You’re not required to have any revenue.

Yes you can release your game for free! If you are not making any money off of the game, there are no royalties due.

Even if you were making money from it you only pay royalties on amounts greater than $3000 per quarter, so you can theoretically make $12,000 per year and not owe Epic any royalties. Only once you go above $3000 in a single quarter (3 months) you do need to start paying the 5% royalty.

How you price your game is up to you and giving away free copies is not a problem, just make sure you keep a record of any sales you make since you will need to report it to Epic. Here’s the UE4 FAQ, scroll down to Releasing Products section for more info, and here is the Royalty Reporting Guidelines page with even more info.

Hope that helps!

EDIT: @atypic beat me, will leave my post though since the links may be helpful