User gets first x units of a product free, then has to pay per unit thereafter I am wondering if anyone can point me in the right direction. There is only a single product type on my site, however I want every user to get 1000 "point" credit every month. They can buy 1 product for each credit.

I am assuming some kind of checkout system is also necessary, but the payments only have to be through paypal or something similar.

any suggestions?
You will probably want to look at the Userpoints API (http://drupal.org/documentation/modules/userpoints) and possibly utilized Rules in conjunction with an eCommerce solution like UberCart.

Or, if you don't need to actually take payment in money at all, there is a Userpoints Contrib module for facilitating points in conjunction with downloads.

userpoints-download
Users lose or gain points when the download attachments (requires site to be configured with private download method).