Freemium ROI Calculator
How much does your support cost per free user? When does your free tier actually pay off?
Calculate the profitability of your freemium model and find the exact break-even point for your business.
Freemium ROI Calculator
Calculate the profitability of your freemium model and find the break-even point
Basic Settings
Understanding Freemium Models
What is a Freemium Model?
The freemium model is a business strategy where a product or service is offered for free, while charging for advanced features or premium versions. This strategy is commonly used by SaaS companies to acquire new users and later convert them to paying customers.
When Does a Free Tier Pay Off?
The profitability of a free tier depends on various factors, including the cost per free user, conversion rate to paying customers, Customer Lifetime Value (CLV), and marketing costs saved through organic growth.
How to Calculate Cost per Free User?
The cost per free user consists of several components:
- Support costs (support team time and tools)
- Infrastructure costs (servers, databases, CDN, etc.)
- Development costs for free features
- Onboarding and user management
- Customer acquisition costs (CAC)
Benefits of a Freemium Model
A well-designed freemium model can offer various advantages:
- Lower acquisition costs for new users
- Larger user base and more market data
- Organic growth through word-of-mouth
- Ability to test products with real users
- Building a community around the product
- Network effects and viral growth potential
Industry Benchmarks
Typical freemium conversion rates vary by industry:
SaaS Tools
1-5%
conversion rate
Gaming
2-5%
conversion rate
Media/Content
0.5-2%
conversion rate
Productivity Apps
1-3%
conversion rate
Remember that these are general benchmarks. Your actual conversion rate will depend on your product quality, market fit, pricing strategy, and user experience.