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A metric used by software vendors to track how many customers convert from a free trial or a “freemium model” to a paid subscription. A free trial refers to a free account that gives customers a limited-time access to try the software before it expires.

A “freemium model” gives customers unlimited access to a pared-down version of the software that reserves certain features for paid users. The end goal for both of these is to convert users into paying subscribers and track that as paid sign-ups.

To calculate paid sign-ups as a rate, divide the number of free users that converted into paying customers in a given period by the total number of free trials or “freemium model” users. Multiply this number by 100 to find the percentage rate.

Formula: Users who converted into paying customers / Free trial or “freemium model” users = Paid sign-ups rate

Some of the most common causes for struggling paid sign-up rates are value gaps in the quality of solution, user onboarding friction and not striking the right balance between giving enough away for free vs. too much.