I've got a friend who used to work for Ryanair in a lowly role - Reservations. There's quite a list of ways they make their money:
- commission on car hire and travel insurance etc they sell on their web site and to telephone callers
- high % of internet bookings
- no cargo taken (avoids loading delays)
- excess baggage charge of GBP 4 per kg over 15kg
- no overnights
- fly the planes from 0600 to 2300 with 25 min turnaround times
- extra charge for using credit and debit cards
- on board sales of drinks, snacks, souvenirs, bus and train tickets
- GBP 1.00 per min Internet Booking Helpline and they get a cut of the telephone booking call charge
- use "secondary" airports
- only use 737s (only one type to maintain and crew)
- simple check in procedure
- no refunds, if you're late checking in you have to pay a GBP 40 missed departure fee to go on the next flight
- cabin crew clean the plane during turnrounds
- minimal number of cabin crew
- charge to change bookings
- no child fares
- as mentioned clever "yield management" (it's usually expensive to go at the last minute, the cheapest fares are more easily found on Tuesdays and Wednesdays rather than the weekend)
Sorry if I've forgotten anything.