Model revenue · Calculator
Freemium Conversion Calculator
Model paid upgrades and added monthly recurring revenue from a free-user cohort. See how conversion and pricing change the outcome.
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What is freemium conversion?
Freemium conversion is the share of a group of free users who upgrade to a paid plan within a window you choose. This shows the recurring revenue those upgrades add and what the remaining free users cost to serve.
How the calculation works
Expected upgrades = eligible free users × conversion rate. Added MRR = upgrades × price. Remaining free-user cost = users who do not upgrade × serving cost.
Worked example
A cohort of 10,000 users at 2% conversion produces 200 expected upgrades and $4,000 MRR at $20 per month. The 9,800 remaining free users cost $980 at $0.10 each.
Assumptions and limitations
Choose one cohort and conversion window. Expected users can be fractional. This is not a forecast of repeated monthly upgrades. Paid-user costs, churn and acquisition spending are excluded, so the balance shown is not profit.
Frequently asked questions
What is a cohort?
A group of users who started in the same period, such as everyone who signed up in March. Measuring conversion within one cohort avoids mixing new users with people who have had months to decide.
Why include the cost of free users?
Free users are not free to serve. Hosting, support and compute scale with them, and that cost is what the paid upgrades have to cover.
Is "MRR less free-user cost" profit?
No. It leaves out the cost of serving paid users, churn, acquisition spending and overheads. It shows whether upgrades cover the free tier, nothing more.
Why can the number of upgrades be a fraction?
It is an expected value: 2% of 1,010 users is 20.2. Round it in your head; keeping the decimal stops small inputs from rounding to zero.
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