Work out freemium conversion value instantly with clear inputs, formula shown and shareable results.
The number that decides whether a freemium funnel works is revenue per free user: conversion rate multiplied by paid ARPU. Compare it with the cost of serving a free user and with your paid acquisition cost per signup — if it is lower than either, the free tier is a subsidy rather than a channel.
Revenue per free user
RPFU = Conversion % x Paid ARPU
Net contribution
Net = (Free users x Conversion % x ARPU) - (Free users x Cost to serve)
Broad consumer freemium runs at 1-3%; developer and prosumer tools with a hard usage ceiling can reach 5-10%.
Yes. Free users generate support tickets, and in many products they are the largest hidden cost of the tier.