Freemium vs Free Trial — Which Produces More Net Revenue?
Freemium gets more signups with lower conversion. Free trial gets fewer with higher conversion. Model both at your numbers to see which wins.
Freemium Model
Free Trial Model
How the Comparison Works
Freemium and free trial convert at different rates and carry different support costs. The better model for you depends on your specific ARPA, conversion rates, and cost per free user.
1. Freemium math
More signups (higher signup rate), lower conversion (2-5% typical), but supports every free user indefinitely.
2. Free trial math
Fewer signups (credit card friction or time commitment), higher conversion (15-30%), support cost only during trial.
3. Net revenue comparison
Compare new paid customers × ARPA × margin minus total support cost. The winner depends on your specific mix.
Frequently Asked Questions
What is a typical freemium to paid conversion rate?
Freemium conversion typically ranges 2-5% of free users converting to paid. Best-in-class products (Slack, Zoom) achieve 15-30% through heavy product-led usage triggers. Consumer products tend toward 2-5%.
What is a typical free trial conversion rate?
Free trial conversion typically 15-35% of trialers converting to paid. Opt-out (credit card required) trials convert higher (25-50%) but fewer signups. Opt-in (no card) convert lower (10-25%) but more top-of-funnel.
When should I choose freemium over free trial?
Freemium fits: viral/network effects, very low marginal support cost, lower ARPA ($10-$100), and free tier provides real value without enabling abuse.
When should I choose free trial over freemium?
Free trial fits: higher ARPA ($100+), meaningful support cost, product requires active engagement, or sales-assisted onboarding in the motion.
Can I run both freemium and free trial?
Yes, increasingly common. Many companies offer freemium with a free trial of the paid tier at the same time. Low-intent users self-serve free; high-intent users get time-pressure to paid.
What support cost per free user should I use?
Based on tickets per user × cost per ticket. $0.10-$2.00 per free user per month is reasonable for most SaaS. Heavy data-processing can be $5-15. Community-supported near $0.
A/B Test the Models with Real Data
Run your actual traffic through a shared attribution layer and see which converts better for your specific ICP.