Pricing Models

Freemium

A pricing strategy offering a permanently free tier alongside paid plans with more features or usage.

Freemium uses the free tier as top-of-funnel acquisition, betting that enough free users will eventually convert to paid. The free tier must deliver genuine value — shallow free tiers drive sign-ups but not activation or conversion. The economic logic works when conversion rates and LTV are high enough to fund the free users. Consumer SaaS typically sees 2–5% free-to-paid conversion; B2B products can see 10–25% depending on the free tier's constraints. The hardest design decision is where to draw the line between free and paid — too generous and no one upgrades; too restrictive and no one stays. Freemium also creates support costs and infrastructure overhead for users who may never pay. It works best when free users create value for paid users (through network effects or shared content) or when the free tier is a natural trial of core functionality.