People are always asking me for estimates regarding conversion rates for freemium models. In general, it is hard to say–it depends on the nature and quality of the free service, the additional value provided by the premium service, and the extent to which each offering is marketed both on the site and elsewhere.
However, over time, some general rules of thumb have begun to emerge. We recently gathered a bunch of articles on freemium models, and looked at a wide range of companies leading the freemium charge. A good starting point for assumptions (for a thriving model) would be that at any point in time, premium subscribers would be somewhere between 1-4% of total subscribers.
Here are a few useful articles with data on conversion.
- http://techcrunch.com/2009/05/19/pandora-gives-the-freemium-model-a-thumbs-up-with-pandora-one/
- http://gigaom.com/2010/06/02/rdios-silence-ends-as-skype-founders-launch-music-subscription-service/
- http://gigaom.com/2010/05/19/never-charge-for-a-mobile-app-and-other-freemium-lessons-from-vcs/
- http://www.siliconvalleywatcher.com/mt/archives/2010/03/emergence_capit.php
- http://dondodge.typepad.com/the_next_big_thing/2007/05/freemium_free_t.html
- http://gigaom.com/2010/03/26/case-studies-in-freemium-pandora-dropbox-evernote-automattic-and-mailchimp/
- http://www.forentrepreneurs.com/saas-metrics/
If you have other articles or data to share, I'd love to see it and will share here.
