The Economics of Freemium vs. Free Trial with Profitwell CEO Patrick Campbell


Patrick Campbell, CEO of subscription metrics platform Profitwell, joins Raj to cover the differences between freemium, a free trial, and "faux" free trial. 

With the way marketing is going, Patrick believes that in the next 10 years, you won't be able to build a successful SaaS without a freemium offering.

Noteworthy insights:

  • Benchmarking a typical freemium conversion rate is difficult because it depends on how companies acquire leads and how good those leads are... (you can be great at getting lots of people to take you up on your freemium product, but if most of them aren't actually your ideal customer, conversion will be low)
  • You should monitor conversions over 30-days as well as 6-months; and 50% of good leads should convert within 6 months, says Patrick 
  • Pace yourself: The best companies wait until they know how to convert leads, they implement freemium after a few years
  • A big mistake Patrick sees is when companies approach freemium as a cheap or worse version of their product; "Your freemium version has to be better than the paid competition," says Patrick

Shakespeare said 'To be, or not to be? That is the question.' But if he lived today he'd probably say 'Freemium or Free Trial? That is the question.' Plenty of companies have tried one or tried both and failed, not fully realizing the economics of each, and what conditions better enable one acquisition strategy versus the other.

To help unpack HOW to figure this out, I welcome the Prophet of Pricing, Profitwell CEO Patrick Campbell to this week's episode. Patrick shares the what, how, and why of this age old topic, breaking down the considerations and success factors, and we even play a game of 'Freemium or Free Trial' where I come up with company ideas and he shares which strategy to go with.

Find Patrick online: Twitter: @patticus Find Profitwell online: