Inquiring minds want to know… What is the average free to paid conversion rate from a free trial or freemium? What is a “good” conversion rate from free trial to paid?
Without an industry survey out there and in the process of defining the growth plan for my own company Notejoy, I was curious to see whether benchmarks could be compiled from companies and experts who have shared data points of what they have typically seen. My summary compiled below.
There are three primary models for free-to-paid in SaaS
Most SaaS companies primarily follow three primary business models when offering free to paid products.
- Freemium — the product is offered free of charge, but money is charged for advanced features or functionality
- Free trial (without credit card) — the product is offered on a “try before you buy” basis without credit card information
- Free trial (with credit card) — the product is offered on a “try before you buy” basis with credit card details collected up-front
It’s important to recognize the differences between these models because they result in starkly different conversion funnels and quality of downstream user. For instance, a free trial with credit card is naturally going to result in a more qualified but smaller number of signups, resulting in a higher trial-to-paid conversion rate downstream than a similar flow that doesn’t demand credit card details up-front. When the specifics of with/without credit card were unavailable, I’ve omitted them from this dataset rather than attempt to draw conclusions from them — a good example of this being Groove’s 2013 survey of 1,500 companies, which is worth checking out but omitted from the list due to this issue.
While many consumer products are freemium (e.g., Skype, Spotify, Dropbox), most B2B products tend to skew toward free trial. The 2015 Pacific Crest SaaS survey suggests that 30% of companies are deriving some ACV from “freemium” while 60% derive revenue from free trial “Try Before You Buy”.
Freemium to Paid Conversion Benchmarks
Freemium conversion rates are generally in the low single-digits.
Sources
- 1–10% Insight Venture Partners article on companies like 37signals, Dropbox, Evernote, GitHub, HootSuite, New Relic, SurveyMonkey, Weebly, Zendesk (2012)
- 3% for SaaS or B2B Web Apps — Lincoln Murphy from Sixteen Ventures (2010)
- 4% — Dropbox’s % paid of total userbase (2012)
- 30% — Slack (2014)
- 6% after 2 years; 4.9% of MAUs — Evernote (2010) & TC article (2009)
Free Trial to Paid (without credit card) Conversion Benchmarks
Free trial conversion to paid conversion rates vary considerably from low single digits to upwards of 25% depending on product category and target customer.
Sources
- 6–10% — Customer.io (2014)
- 10% with peaks as high as 18% — Justuno (2016)
- 15% — Totango study of ~100 SaaS companies (2012)
- 25% — Recapture.io (2016)
- 2–3% — 3 Minute Optimizer (2015)
- 2–4% — GoToMyPC / GoToMeeting (2011)
- 3.75% — Salesforce (2006)
- 15% — Chargebee (2016)
- 10% — Gutensite (2013)
Free Trial to Paid (with credit card) Conversion Benchmarks
When credit card details are collected up-front, trial-to-paid conversion rates are significantly higher and range from 30–50%.
Sources
- 50% — Totango study of ~100 SaaS companies (2012)
- 30–40% — 3 Minute Optimizer (2015)
- 40–45% — GoToMyPC / GoToMeeting (2011)
- 40–50% — Callwave (2011)
- 56% — Moz (2012)
Did I miss any data points? Leave me a comment and I will post an update. Also, get the full presentation here.
Ada Chen Rekhi is co-founder & COO of Notejoy, a collaborative notes app for individuals and teams. She’s also an executive coach who works with founders and executives looking to scale themselves as they scale their teams. If you enjoyed this essay, subscribe to her newsletter or follow her on @adachen.