Revenue

What is Conversion to Paid Rate?

Percentage of free users who convert to a paid plan.

Definition

Conversion to Paid Rate (also called free-to-paid conversion) measures how effectively your product converts free or trial users into paying customers. This is the most critical monetization metric for freemium and free-trial business models. The rate is influenced by value delivery during the free period, pricing clarity, upgrade prompts, and feature gating strategy. Optimizing this metric often yields higher ROI than increasing top-of-funnel acquisition.

Formula

(Free users who became paid in period ÷ Total free users in cohort) × 100

How to measure

Track `subscription_start` or `payment_complete` events for users who were previously on a free plan. Segment by time since signup, features used during free period, and plan tier chosen. Calculate cohorted conversion rates to understand how conversion behavior changes over time.

Industry benchmarks

Freemium SaaS: 2–5% is typical; 7%+ is strong. Free trial (time-limited): 15–25% for opt-out trials, 8–15% for opt-in trials. PLG (product-led growth) companies: 3–8%. Enterprise with sales assist: 20–40%.

Used in feature types

Monetization

Related metrics

ARPU (Average Revenue Per User)

Average revenue generated per active user.

Revenue per Feature

Incremental revenue directly attributable to a specific feature.

Activation Rate

Percentage of new users who complete the defined activation event within the onboarding window.

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