Growth and monetization
Freemium vs trials
Free forever when free users create distribution. Time-boxed trials when each free account is expensive to serve.
How people start is part of packaging. Four common models:
| Model | How it works | Best when | Risk |
|---|---|---|---|
| Freemium | Free forever with limits | Network effects, viral loops, high volume low touch | Free users never convert; COGS on free tier |
| Free trial | Time-boxed full (or near-full) access | Value needs a fair test drive; clearer WTP | Trial ends before aha; calendar churn |
| Reverse trial | Start on premium features, then downgrade to free/paid lower tier | Showing premium value quickly | Feels bait-and-switch if downgrade is harsh |
| Opt-in trial / freemium hybrid | Free forever + optional trial of pro | Broad top of funnel + upgrade path | Complexity |
Directional conversion benchmarks vary by category and era; treat public survey numbers as order-of-magnitude only. Many B2B PLG products see single-digit to low-teens free-to-paid conversion of activated workspaces, with wide dispersion. Optimize activated free → paid, not signup → paid.
Trade-off
Freemium vs time-boxed trial. Choose freemium when free users create distribution or data network effects and COGS per free user is low. Choose trials when each free account is expensive to serve (heavy compute, human support) or when the product is single-player with weak virality. If free users never invite or publish, freemium is often a cost center wearing a growth costume.
Walking through the choice
A collaborative canvas where every free user invites two teammates: freemium funds distribution. An AI report that costs real GPU time per run: a time-boxed trial, or free-with-tight-limits plus easy upgrade. Same company adding both a viral editor and a heavy model should not copy one model onto both products.
Common mistakes
- Optimizing signup → paid. The number that matters is activated free → paid.
- Freemium with high COGS and no invites. You are paying for tourists.
- Trial that ends before aha. They never felt the job get done.
Check yourself
Free users never invite or publish, and each account costs real compute. Freemium? Usually a cost center. Use a trial, or tight limits plus a clear upgrade.
Which conversion rate should you put on the dashboard? Activated free → paid, not signup → paid.
Key takeaways
- Freemium needs low COGS or strong loops. Trials fit expensive-to-serve products.
- Reverse trials show premium fast; a harsh downgrade feels like bait.
- Optimize activated free → paid. Signup conversion is a vanity trap.
Further learning
Next: usage-based pricing and how to avoid bill shock.
Related
Pricing and packaging
Value metrics, tiers, freemium vs trials, usage-based pricing and how to test prices.
Good-better-best packaging
Three tiers so buyers self-segment. Gate admin and scale, not the aha.
Product-led growth
The product acquires, converts and expands. Sales does not create demand from zero for every deal.