Product metrics and goals
Freemium conversion rate
Also called Free to paid conversion, Upgrade rate, Paywall conversion
The share of free users who start paying. In freemium products it's usually low, often a few per cent over a user's lifetime, and that can still be healthy.
How it's worked out
Upgrades ÷ free users, for a period or a sign-up cohort × 100. At the limit: upgrades right after hitting it ÷ users who hit it × 100
A freemium product gives most people value for free and charges for limits or features that matter to some. Two numbers explain the rate: how many free users reach a paid limit, and how many of those upgrade when they do.
If few people reach the limit, it may be set too high or the paid features are hard to find. If many reach it and few upgrade, the price or the value behind it is the problem.
In practice
8% of free users hit a paid limit in a month and 10% of those upgrade, so the monthly upgrade rate is 0.8%.
Common mistake
Comparing a monthly upgrade rate with a lifetime one. They measure different things and can differ by ten times.