Freemium pricing works when the free plan stops at the team

Freemium pricing means offering a free plan with no end date next to your paid plans, and hoping enough free users grow into paying ones. For B2B software it works when one person gets real value alone and the reason to pay shows up once a team or a company depends on the product. If your product only proves itself after setup, data and colleagues are in place, use a free trial or a reverse trial instead.

Published benchmarks show free trials converting two to three times as often as freemium, so a free plan has to earn its place through volume and word of mouth. Hold back the features a team needs, keep the first useful outcome free, and interview the free users who never paid to learn what would change their minds.

Freemium, free trials and reverse trials differ in where a user ends up

All three let people use the product before paying. They differ in what happens when the free period ends.

Airtable's plans page is a clear example of a reverse trial. The first workspace on a new account gets a 14-day trial of the Team plan automatically, and when it ends the workspace can stay on the Free plan. Elena Verna, a growth leader who writes about the model, also lists Canva, Asana, Notion and Dropbox as companies using versions of it, and notes that Asana's trial runs 30 days.

Published conversion data says free trials convert two to three times as often

Very few companies publish free-to-paid conversion rates, so the best public benchmark is a survey. In 2023, Kyle Poyar and Lenny Rachitsky surveyed more than 1,000 products and published these ranges (the full post is for paid subscribers; the figures below are in the free part):

The spread is wide. In the same survey, a fifth of freemium products converted below 2.5%, and only 7% of free-trial products did. In his guide to reverse trials, Poyar writes that free trial products often convert at 2 to 3 times the rate of freemium ones. Verna puts the ceiling for pure freemium bluntly: even the best performers see about a 5% conversion rate, by her account.

Two public companies filed numbers that show the shape of a freemium funnel:

• Dropbox. Its 2018 IPO filing reported over 500 million registered users but only 11 million paying users at the end of 2017. That is about 2.2% by our calculation, and the filing warns that registered accounts overcount people, since one person may register more than once.
• Slack. Its 2019 IPO filing counted more than 600,000 organizations with three or more users: more than 88,000 paid customers and more than 500,000 on the Free plan. It also said organizations that moved from Free to paid in a given year produced about 8% of that year's revenue (about 10% the year before).

Read the Slack figure carefully. The other 90% or so of each year's revenue came from organizations that were already paying before the year began or that never started on Free. The free plan fed the top of the funnel; it did not carry the business by itself.

Short version: a low freemium conversion rate is normal. What matters is whether the free users who do convert are worth enough to pay for everyone who never will.

Gate what grows when the product becomes a team habit

The free plan should let one person reach the moment where the product is clearly useful. The paid plan should start where the product becomes something a team relies on. Slack's filing named its own triggers: organizations often converted because they wanted to search beyond 10,000 messages, the Free plan's limit then, and because they wanted single sign-on on a higher plan. Today Slack's help center lists 90 days of message and file history on the Free plan. Airtable's Free plan caps each base at 1,000 records and allows 5 collaborators with editor or creator permissions, per its plans page.

Both companies gate the same kinds of things. Good candidates for the paid side:

• History and volume. Records, storage and searchable history all grow as a team uses the product more.
• Seats and collaborators. The second and fifth colleague are a sign the product has spread.
• Admin and security. Single sign-on, permissions and audit logs matter to the company, and the company has the budget.

Keep the first useful outcome on the free side. If a new user has to pay before they see why the product exists, you have built a trial with extra steps. (And a slower one.) For gates that scale with usage, usage-based pricing covers how to choose the unit, and tiered pricing covers how to split features across paid plans.

Pick freemium only if one user gets value in their first session

Choose the model by asking how long it takes a new user to see the value, and who sees it.

• Use freemium when a single person gets value on day one and invites colleagues on their own. Note-taking, scheduling and file sharing fit.
• Use a free trial when value depends on setup, imported data or an integration, and buyers arrive already shopping. A time limit gives them a reason to finish setup.
• Use a reverse trial when the paid features are what make the product memorable, and you still want non-buyers to keep using the free plan and bring in colleagues.

The tradeoff: a free plan costs money to serve and support, so every free user who never pays is a cost you carry indefinitely.

A made-up example: a contract tracker for small law firms

Here is a made-up example. Priya runs a startup that sells a contract tracker to law firms with fewer than 20 lawyers. A lawyer can upload contracts and get renewal reminders in about ten minutes, which suggests freemium.

She looks at where firms get stuck. Solo lawyers use the reminders happily and never pay. Firms pay when a second lawyer needs to see the same contracts, and when the managing partner wants a report of every renewal due this quarter. So the free plan covers one user and up to 50 contracts. The paid plan adds shared access, unlimited contracts and the quarterly report.

Her open question is whether solo lawyers would ever pay. A price change will not answer that. Talking to them will.

Interview free users who upgraded and free users who did not

Your analytics show who upgraded and when. They do not show why the others stayed free, and that is where most of your users are. Interview both groups, five or six of each, and keep the questions about past behavior. Willingness to pay explains why answers about hypothetical prices run high.

For users who upgraded, reconstruct the week before they paid:

1. What happened at work that week that made you look at the paid plan?
2. Who else was involved in the decision, and who paid?
3. What did you check before you paid, and what almost stopped you?

For active free users who never upgraded:

1. What do you use it for, and how often?
2. Have you hit a limit? What did you do when you hit it?
3. If the free plan disappeared tomorrow, what would you use instead?
4. Who at your company buys software like this?

For users who dropped from a reverse trial to the free plan, add one question: which paid feature did you notice was gone, and what did you do about it? If nobody noticed, the trial is showing them the wrong features.

Check each story against your records before drawing conclusions. A user who says the price was the problem but never opened the pricing page probably had a different problem. People who left entirely are a separate group; interviewing churned customers covers them.

Your next step

Write down the one event that most often comes right before a free account upgrades, then find out whether your free plan lets users reach it. Talk to someone who has designed a free plan at a company like yours before you change the limits.

Instant Expert can find people matching a description such as "growth leads who ran freemium and reverse trial tests at B2B software companies." You review who it finds, it sends your invitations, and you pay only for calls that get booked or answers you receive. The directory pages for product-led growth experts and pricing and packaging experts are good places to start.