A combination of “free” and “premium,” “freemium” is a tactic used to generate viable leads by offering them an opportunity to test a product for free. Despite this being a popular marketing tactic among many software companies, the average conversion rate from freemium to paid users is only one percent. Living in a digital-centric world has given rise to a crowded, competitive landscape for software companies. Their potential customers are drowning in endless options with free trials, new features and special offers everywhere they look. This has made it difficult for software companies to gain the competitive edge they need to succeed in today’s marketplace.

With this in mind, our team has come up with a strategy for software companies to create a successful freemium product that will increase your chances of getting users to convert and stay loyal to your brand.

Creating a Balanced Freemium Product

A good freemium offer has a solid balance between the free and the premium. Because every business model is different, freemium opportunities are going to vary – but it’s important that you try to find a happy medium when giving your products and solutions to users free of charge.

If people are downloading your freemium trial, but quickly deleting it, the features you’re giving away might be too insignificant. In other words, your users aren’t being enticed with enough features or benefits to see the worth in paying for the paid version. Remember, in order to make your potential customers fall in love with your brand and its products, they need a solid chance to test them.

In contrast, if you’re seeing a flood of new freemium users but not many purchasing the paid version, your free offerings might be too satisfactory. This discourages freemium users from spending money on the paid version since they already have most of what they need through the free version. You want to keep your audiences enthused at the opportunity to have an awesome freemium opportunity, but not to the extent where they think they’ve gotten everything your business has to offer.

Marketing Your Freemium Product

As far as generating new users goes, referrals spread quickly in the software industry. People don’t want to test out a bunch of products in the hopes that they’ll find a decent one over time. Instead, they rely on word-of-mouth recommendations, which is why you’ll see strong customer loyalty to a handful of software companies that offer well-designed freemium products.

To get referrals circulating and create a buzz about your brand, send strategically selected emails to strategically selected influencers and decision-makers. We don’t recommend you push your freemium opportunity to everyone in a company because you might come off like a spammer. Simply targeting influencers will give your brand traction and popularity because it will be promoted to peers and coworkers.


Another way to market your freemium products is through social media. LinkedIn, Facebook, and Twitter can have a huge influence when it comes to expanding your network and communicating new freemium opportunities. Social posts are effective because people can promote, comment, and exchange easily; if just one person shares your post with a network of 500 people, your brand awareness will reach a completely new group of professionals.

Nurturing to Sell

If your freemium users need a little push to convert from free to paid users, you might want to try giving them an incentive. Promote a discount with an expiration date so users will be more compelled to grab it before it’s gone. For example, give your users a 20% discount for the paid software upgrade, but with an offer of one week to keep them from postponing decisions about your product.  


Another way to motivate conversion is to put a cap on the use or size of your freemium offer. If your software has been used over ten times, or they’ve added over ten clients to the freemium program, they’ve reached their limit and should purchase the premium offer to expand their usage.

The bottom line: your free offerings should only skim the surface of what your business truly has to offer. Only with purchasing the paid version will these users see your full version, allowing them to become advocates of your brand.


Phil Libin, the CEO of Evernote, explains that “the easiest way to get one million people paying is to get one billion people using.”

Because there is a huge window of opportunity to test and try software products easily, conversion rates from free to paid users tend to be low. However, if you focus on balancing your products, marketing them to the right audiences, and nurturing your users through the freemium funnel, you might just get those billion users.


The Ultimate Guide to Fixing Your High-Tech Marketing Funnel