Introduction
Deciding what's free and what's paid is one of the most consequential product decisions you'll make. Get it wrong and you either starve growth (too much gated) or leave revenue on the table (too much free).
Monetization Models Overview
- Freemium: Core free, premium features paid (Spotify, Duolingo)
- Free trial: Full access for X days, then paywall (most B2B SaaS)
- Usage-based: Free up to a limit, pay for more (Slack, Notion)
- Ad-supported free + ad-free paid: (Many mobile games)
What to Gate Behind Paywall
Keep free: Core value proposition, features that drive word-of-mouth, basic usage limits
Gate as paid: Advanced features, higher usage limits, collaboration/team features, priority support, customization, analytics/reporting
Paywall Timing & Placement
Too early (Day 1): Users haven't experienced value; low conversion, high frustration
Optimal (Day 3-14): Users understand value, hit a natural limit or want more
Too late (Day 30+): Habits formed around free tier; harder to convert
Trigger-based paywalls: Show upgrade prompt when user hits usage limit or tries premium feature—contextual, not intrusive.
Pricing Tier Strategy
| Tier | Target User | Strategy |
|---|---|---|
| Starter | Individual, casual | Low price, drive volume |
| Pro | Power users | Main revenue driver |
| Enterprise | Teams/companies | Custom pricing, anchors Pro tier |
Measuring Conversion
Track: free-to-paid conversion rate, time-to-conversion, LTV per tier, churn rate by tier. A/B test paywall placement and pricing.
Conclusion
The free/paid line should align with your core value (keep free) and convenience/power features (gate as paid). Time paywalls after users experience value, and use 3-tier pricing to maximize both conversion and revenue.
Related Resources
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