HACKER Q&A
📣 MrDresden

Expected size of paying customer base with a freemium model?


I just finished listening to an interview with Drew Houston, co-founder of Dropbox, on the podcast 'How I built this' (episode published on the 9th of November 2020 for those interested).

During the interview it was mentioned that as Dropbox operates using a freemium model only around 3-5% of the total userbase are paying customers.

This got me wondering, is this the expected percentage of paying customers when using a freemium model (when successful)? Or does it matter if the product has built-in inherent virality to it (is the number usually lower than 3-5% and Dropbox has it better than most)?

  👤 Frew_M Accepted Answer ✓
That's a great interview on HIBT and you bring up a great question, as it's possible the way they explained it makes it sound like that's an 'expected' freemium user-to-paid percentage across the board.

It really depends on the product/service, company size/funding and the marketplace(s) that your customers find your product.

I operate a few SaaS services with a freemium plan and we're very, very far north of 3-5% of paying customers from our customer base.

But one of the many differences is I'm operating small software services. Dropbox is very different in that regard and there's just no apples to apples comparison between those two business models.

But 3-5% is not something you should believe is set in stone as 'normal' for all businesses in all marketplaces. It, as many things do, comes down to "it depends..."

It's possible to have a much, much higher percentage of your customers paying even when offering a freemium model.