Freemium is not a religion

Freemium is supposed to be a lead magnet, but that’s too simple of an answer.

I have had clients who charged from day one.

I have had clients who let anyone start free.

Both worked.

Both failed.

It came down to one thing.

Who you want walking through the front door.

Paid up front does one job really well.

It weeds out testers, students, and drive by accounts.

That is good.

Unless your buyer is a developer who needs to try it before they can get budget.

Freemium does one job really well.

It maximizes top of funnel volume.

That is good.

Until free usage turns into abuse.

This blog is about the messy middle.

The part that does not fit in a tweet.

The part where the “right” answer changes based on cost, buyer behavior, and how your product delivers value.

Title: Freemium or Paid First in PLG. The Real Tradeoffs

What You Are Actually Choosing

Most teams frame this as pricing.

It is not pricing.

It is filtering.

Paid first is a filter on intent.

Freemium is a filter on patience.

Paid first says: “Show me you have budget.”

Freemium says: “Show me you have time.”

Neither one is moral.

Both are mechanics.

If you do not design the mechanics, the mechanics will design your business.

Support load, spam, cloud cost, and conversion math will make the decision for you.

The Real Rub. Free Users Get Creative

Here is the rub.

Free users have infinite creativity.

-New Gmail (or using “.” or “+” for the same account as far as Google is concerned but a unique account to your production instance)

-New account

-More free usage

If your free plan has meaningful value, someone will try to loop it.

It might be a student.

It might be a dev testing.

It might be a competitor.

It might be an automated script.

Intent does not matter to your cloud bill.

This is why freemium is rarely “free.”

Freemium is prepayment.

You are paying the cost up front in exchange for a shot at future conversion.

If you choose freemium, accept the tax.

Then engineer around it.

Gates. The Only Thing That Makes Freemium Work

So freemium forces you to build gates.

-Feature locks

-Rate limits

-Verification steps

-And yes, duplicate handling

Gates are not a dark pattern.

Gates are how you keep the free tier useful without letting it eat the company.

The hard part is that gates cut both ways.

Pro:

You protect variable cost and support load.

Con:

You can throttle the “aha moment” so hard that nobody gets there.

A strong free plan lets someone hit value fast.

A strong gate prevents someone from extracting value forever.

That balance is the whole job.

Paid First Is Not “Anti PLG”

Paid first still can be PLG.

If you make the first payment small and the onboarding fast, you are still product led.

You are simply enforcing signal quality from day one.

Paid first works best when the marginal cost of usage is real.

Minutes.

Compute.

Humans in the loop.

Compliance review.

Anything that scales linearly with activity.

In those cases, paid first keeps the funnel honest.

It stops you from celebrating vanity growth that is actually a cost bomb.

It also gives you cleaner data.

Fewer accounts.

Higher intent.

Less noise in your identity layer.

Less duplicate churn from people who keep re-registering.

The cost is obvious.

Some real buyers will bounce because they cannot swipe a card.

They might be the right user.

They might become the buyer later.

You filtered them out before they could advocate internally.

The Developer Budget Problem

This is the part founders miss.

In PLG, the user and the buyer are often not the same person.

Your buyer might be a manager with budget.

Your user might be a developer who is paid to evaluate tools, not buy them.

A developer with no budget will skip a paid wall.

Even a small fee.

They will move to the next tab.

At the same time, developers hate friction that feels pointless.

If the product is cheap, clean, and fast, some developers prefer paid first because it signals seriousness.

They know they are less likely to be fighting spam and broken onboarding.

So the decision is not “developers want free.”

The decision is “developers want a fast path to value.”

Sometimes that path is free.

Sometimes it is cheap and simple.

Sometimes it is paid, then refunded, then credited back later.

Conversion Rates. The Part Where Teams Lie to Themselves

Now layer on conversion rates.

This is where most teams lie to themselves.

Because funnels are easy to read the wrong way.

Big traffic numbers feel good.

Signup conversion feels like progress.

Neither one pays the bills.

Rules of thumb I use.

If you have tons of traffic and low conversion to active use.

-Your door is too open

-You are collecting noise

-Add friction before account creation or before first real usage

What “friction” looks like depends on the product.

Email verification

Domain verification for certain actions

Phone verification for high cost actions

Blocking disposable emails

Captcha or bot protection

A short use case selection

A lightweight “tell me who you are” step before expensive usage starts

The goal is not to reduce signups.

The goal is to improve signal quality.

Your activation rate should rise even if raw signup volume falls.

If you have strong activation and conversion, but growth is flat.

-Your door is too tight

-You are filtering out real buyers

-Lower the intro price or loosen the first gate

This is where paid first teams get trapped.

They built a great product, but they are over-indexed on filtering.

They are shrinking the top of funnel so much that they never get enough shots on goal.

If the product is sticky and retention is strong, loosen the first constraint.

Make the first step easier.

Let more people reach value.

Then upsell later.

If you have good signup conversion but bad paid conversion.

-Your free plan is either too generous or too painful

-People either never need to pay, or they never reach value

This is the classic freemium failure mode.

Your free tier becomes a forever tier.

Or it becomes a teaser that never lets anyone hit the “aha moment.”

Both create the same outcome.

You carry cost without creating revenue.

Duplicate Handling Is Not a Side Quest

If you run freemium at scale, duplicates become a core system.

Not a cleanup project.

You need to decide what “one user” means.

Is it one email string.

One mailbox.

One device fingerprint.

One org domain.

One billing profile.

One payment method.

If you do not define this, you cannot enforce it.

If you cannot enforce it, free usage caps become a suggestion.

Practical approaches that show up in real companies.

-Usage limits attached to an org identity, not a contact record

-High cost features require a verified domain or a paid method on file

-Risk scoring for signups that look like repeats

-Cooling off periods for free retries

-One-time free trial minutes that do not reset with new emails

-Soft blocks that require support review after repeated attempts

None of these are perfect.

The goal is to move abuse from “easy” to “annoying.”

Abusers leave when it is annoying.

Real users complain, but they stay if the value is real.

A Simple Measurement Stack That Keeps You Honest

Freemium and paid first both require measurement.

If you do not instrument the funnel, you will argue about feelings.

At minimum, track these rates, weekly.

Signup to activation

Activation to repeat use

Repeat use to paid

Paid retention by cohort

Support tickets per 100 active users

Cloud cost per active free user

Percent of signups flagged as likely duplicates

Percent of free usage consumed by top 1 percent of users

Those last two metrics are the silent killers.

If a tiny slice of users is eating most of the free capacity, your gating is wrong.

If duplicates are rising, your identity layer is leaking.

So Which One Is Better

Freemium is a system.

Paid first is a system.

Both require design, measurement, and enforcement.

Pick the model that provides the most valuable experience for your ICP without lighting your cost structure on fire.

Then commit.

Because the worst version is the hybrid accident.

A free plan with no gates.

A paid plan with too much friction.

A funnel full of noise.

And a team staring at “conversion rate” while the burn climbs.

Make the mechanism explicit.

Measure it.

Enforce it.

Ship the next gate with the same seriousness you ship the next feature.