Freemium vs. Free Trial: Which Model Drives Better Economics?
Both models let users try before they buy. But they work very differently and suit different products. Choose wrong and you'll burn resources supporting users who never convert.
Models Compared
Freemium offers a permanently free tier with limited features. Free trial offers full features for a limited time. Each creates different user behavior and economics. Both are SaaS pricing model variations that impact your overall pricing strategy.
| Aspect | Freemium | Free Trial |
|---|---|---|
| Time limit | Unlimited | 7-30 days typical |
| Feature access | Limited subset | Full product |
| Conversion rate | 1-5% typical | 15-30% typical |
| Support burden | High (free users) | Lower (time-limited) |
| Lead quality | Lower (many curious) | Higher (intent to buy) |
| Viral potential | Higher | Lower |
The False Choice
You can combine models: freemium for broad adoption plus free trial of premium features. Many successful companies (Slack, Dropbox) use variations of this hybrid approach.
Freemium Deep Dive
Freemium works when free users provide value beyond direct revenue: viral growth, network effects, or market positioning.
When Freemium Works
Freemium Challenges
Freemium Benchmarks
Conversion Rate
2-5% is good. 5%+ is excellent. Below 1% suggests free tier is too generous or upgrade path unclear.
Viral Coefficient
Each free user should bring 0.3-0.5+ new users. If free users aren't spreading the word, why have them?
Free Trial Deep Dive
Free trials work when you need users to experience full value to convert. The time pressure creates urgency to evaluate seriously.
When Free Trial Works
Trial Length Considerations
| Trial Length | Best For |
|---|---|
| 7 days | Simple products with immediate value |
| 14 days | Most SaaS products (most common) |
| 30 days | Complex products, enterprise sales cycles |
Trial Benchmarks
Conversion Rate
15-30% for self-serve. Higher with sales involvement. Below 10% suggests product or onboarding issues.
Activation Rate
60-80% of trial users should complete key activation steps. Low activation = conversion problem.
Trial Optimization
Most trial users who convert do so in the first few days. Focus onboarding energy on getting users to value quickly. Days 10-14 of a 14-day trial rarely matter for conversion.
Choosing Your Model
Decision Framework
Choose Freemium If...
- Product has network effects
- Users refer other users naturally
- Marginal cost per user is near zero
- Clear upgrade triggers exist
- Mass market with long sales cycle
Choose Free Trial If...
- Full product needed to see value
- Higher price point (>$50/month)
- Sales involvement in process
- Support-intensive product
- B2B with evaluation process
Hybrid Approaches
- Freemium + trial of premium: Free tier forever, trial premium features (Canva)
- Time-limited freemium: Generous free tier for 30 days, then reduced (Notion)
- Trial with ongoing free tier: Full trial, then limited free or paid (many SaaS)
Need Help With Pricing Model?
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