Definition
Freemium is a pricing model where a free tier drives acquisition and a subset of users converts to paid via upgrades or usage limits.
How to use it
- Freemium works best when time-to-value is short and value is obvious.
- Track activation and free-to-paid conversion by cohort to avoid vanity signups.
Why this matters
This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.
Practical checklist
- Write a 1-line definition for "Freemium" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Sanity-check with a related calculator from the same category on MetricKit.
- Read the related guide (e.g., PLG metrics hub: activation, trial conversion, stickiness, and adoption) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- ARR vs MRR Calculator: Convert ARR to MRR (and MRR to ARR) and understand the ARR vs MRR relationship.
- ARR Growth Rate Calculator: Calculate ARR growth over a period and convert it to CMGR and annualized growth (CAGR).
- ARR Valuation Calculator: Estimate a SaaS valuation from ARR and a revenue multiple (ARR valuation).
- ARR Valuation Sensitivity Calculator: Estimate valuation sensitivity to ARR and revenue multiple assumptions (simple 3x3 grid).
- NRR Calculator: Calculate Net Revenue Retention (NRR) from starting MRR and revenue movements.
Guides
- PLG metrics hub: activation, trial conversion, stickiness, and adoption: A practical hub for product-led growth metrics: activation rate, trial-to-paid, DAU/MAU and WAU/MAU stickiness, feature adoption, and PQL-to-paid conversion.
- Cohort analysis playbook: retention curves, LTV forecasting, and payback: A practical cohort analysis workflow: build retention curves, forecast LTV, and translate retention quality into payback and growth decisions.