Free Trial vs Freemium vs Paid: GTM Pricing Models

Quick Overview

Choosing the right pricing model is one of the most critical go-to-market decisions. Each approach—free trial, freemium, and paid—serves different business models, customer segments, and growth strategies.

Free Trial

Best For: B2B SaaS with fast time-to-value

• Access to full product for limited time (14-30 days)
• Credit card often required upfront
• Designed for rapid conversion
• Typical conversion: 5-15%

Freemium

Best For: Consumer products seeking viral growth

• Permanent free tier with limited features
• No time limit
• Maximum user acquisition
• Typical conversion: 2-5%

Paid

Best For: Enterprise software with high ACV

• Direct sales model
• No free access
• Self-selected, qualified customers
• Typical conversion: 20-40%

Key Comparison Metrics

| Metric | Free Trial | Freemium | Paid | |--------|------------|----------|------| | Conversion Rate | 5-15% | 2-5% | 20-40% | | User Volume | Medium | Highest | Lowest | | Lead Quality | Medium | Lower | Highest | | Sales Cycle | ~30 days | Months/Years | Weeks | | CAC | Medium | Low | High | | Best ACV | $500-$5K | $0-$500 | $10K+ |

Free Trial Deep Dive

How It Works

Users get access to the full product (or most features) for a limited time, typically 14-30 days. The goal is demonstrating value quickly and converting to paid before the trial expires.

Free Trial Advantages

• Full product experience
• Clear conversion timeline
• Urgency drives action
• Easier to attribute conversions
• Qualified leads (took action)
• Faster sales cycles

Free Trial Challenges

• Limited time to show value
• Requires quick time-to-value
• May need sales touch for conversion
• Users may churn post-trial
• Credit card friction reduces signups

Best For Free Trial

• B2B SaaS tools ($500-$5K ACV)
• Products with quick "aha" moments
• Tools requiring setup/integration
• Teams that need fast feedback loops
• Mid-market sales motions

Freemium Deep Dive

How It Works

Users access a permanently free tier with limited features, storage, or usage. Conversion happens when users hit limits or need premium capabilities.

Freemium Advantages

• Maximum user acquisition
• Zero friction signup
• Viral growth potential
• Network effects leverage
• Large top-of-funnel
• Product-led growth engine

Freemium Challenges

• Low conversion rates (2-5%)
• Infrastructure costs for free users
• Long monetization timeline
• Hard to justify without scale
• May attract wrong customers
• Feature gating complexity

Best For Freemium

• Consumer applications
• Products with network effects
• Large addressable markets
• Viral growth potential
• Low marginal cost per user
• PLG companies

Paid Deep Dive

How It Works

No free access—customers pay before using the product. Often combined with demos, sales conversations, and custom pricing.

Paid Advantages

• Highest conversion rates (20-40%)
• Self-qualified customers
• Higher average deal size
• Clear revenue attribution
• No freeloader costs
• Serious buyers only

Paid Challenges

• Smaller top-of-funnel
• Higher CAC
• Requires sales team
• Longer sales cycles
• Trust barrier higher
• Limited organic growth

Best For Paid

• Enterprise software ($10K+ ACV)
• Complex solutions requiring customization
• High-touch sales processes
• Regulated industries
• Mission-critical tools
• Professional services

Conversion Rate Benchmarks

Free Trial Conversion

| Trial Type | Conversion Rate | |------------|-----------------| | No CC Required | 3-8% | | CC Required | 15-25% | | With Sales Touch | 25-40% |

Freemium Conversion

| Segment | Conversion Rate | |---------|-----------------| | Consumer | 1-3% | | SMB | 2-5% | | Enterprise | 5-10% |

Paid Model Conversion

| Deal Size | Conversion Rate | |-----------|-----------------| | $5K-$25K | 20-30% | | $25K-$100K | 30-40% | | $100K+ | 15-25% |

Model Selection Framework

Choose Free Trial when:

• Time-to-value is under 2 weeks
• Product requires setup/configuration
• B2B SaaS in $500-$5K range
• You have sales capacity for follow-up
• Conversion tracking is critical

Choose Freemium when:

• Network effects drive value
• Marginal cost per user is near-zero
• Viral growth is important
• Large addressable market exists
• You can sustain low conversion rates
• Brand awareness matters

Choose Paid when:

• ACV exceeds $10K
• Complex sales process required
• Customization is standard
• Compliance/security is critical
• Sales team already exists
• Quality over quantity matters

Hybrid Approaches

Many successful companies combine models:

Free Trial + Sales

• Free trial for self-service
• Sales team engages high-value trials
• Best of both worlds
• Example: Salesforce

Freemium + Premium

• Free tier for virality
• Premium tiers for power users
• Expansion revenue focus
• Example: Slack, Zoom

Paid + POC

• Paid model with proof-of-concept
• De-risk for enterprise buyers
• Limited-scope paid pilot
• Example: Snowflake

Revenue Impact Analysis

Scenario: 10,000 Monthly Signups

| Model | Conversion | Customers | ACV | MRR | |-------|------------|-----------|-----|-----| | Free Trial | 10% | 1,000 | $1,200 | $100K | | Freemium | 3% | 300 | $600 | $15K | | Paid | 30% | 300* | $12,000 | $300K |

*Paid model typically has fewer signups but higher intent

Conclusion

There's no universally "best" pricing model—the right choice depends on your product, market, and growth strategy. Free trials work best for B2B SaaS needing quick conversion. Freemium excels for consumer products with network effects. Paid models suit enterprise software with complex sales. Most successful companies eventually evolve toward hybrid approaches that combine elements of multiple models.