Formula
Free users converting to paid / Total free-tier users x 100
How to measure
Track a cohort of free-tier signups over a fixed window, typically 90 days, and measure what share upgrade to a paid plan.
Why track it
This rate reveals whether the free tier is a genuine acquisition funnel or simply a permanent home for users who never intend to pay.
Example
Of 10,000 free-tier signups in a quarter, 350 upgrade to paid within 90 days, a 3.5% free-to-paid rate.