Freemium
DEFINITION
A pricing model that offers a functional free tier indefinitely, with paid tiers unlocking expanded usage, features, or support.
In depth
Freemium works when the marginal cost of free users is near zero, the free product has viral or network effects, and at least 2–5% of free users convert to paid. It fails when the free tier is so generous that no one needs the paid tier — or so thin it doesn't demonstrate value.
Best-in-class freemium conversion: 2–5% free to paid (Slack, Dropbox). Below 1%, reconsider the split.
Put it into practice
Related terms
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Last reviewed 14 April 2026 by Abhi Verma.