Cost modeling
Free-trial conversion impact calculator
For tools you sell, model how a 1-point swing in free-trial conversion rate moves annual revenue. Enter trial signups per month, conversion rate, and average revenue per user.
When this calculator helps
- Prioritizing onboarding investments by expected revenue lift.
- Setting a target for an A/B test on trial-onboarding flow.
- Building the business case for a customer success hire.
When to look elsewhere
- Very low signup volume (<50/mo), variance swamps the signal.
- Tools with no free trial (enterprise sales cycles).
Worked example
A vertical SaaS product gets 400 free-trial signups per month at a 7 percent trial-to-paid conversion rate. ARPU is $79 per month. New MRR added each month: 400 times 0.07 times 79, or $2,212. The product team is debating whether to invest a quarter of onboarding work to lift conversion by 1.5 percentage points.
At the projected 8.5 percent conversion, new MRR per month becomes 400 times 0.085 times 79, or $2,686. The lift adds $474 in MRR per month, or $5,688 in annual revenue. Across the year that is 72 extra paid users. If the onboarding work costs $40,000 in engineering time, the payback is 7 months on the recurring revenue and the lift is durable for the life of the product.
How this calculator works
The formula is the classic funnel math: monthly signups times conversion rate equals monthly new paid users; multiply by ARPU for new MRR. The lift output simply re-runs the math at the boosted conversion rate and reports the delta annualized over twelve months. The "extra paid users per year" number assumes the lift is stable and the signup rate does not change.
The model treats new MRR as recurring revenue, not LTV. To convert to LTV, multiply the annual impact by your average customer lifetime in years (or use 1 divided by your monthly churn rate). The model also ignores expansion revenue, downgrade churn, and refund rates; those typically add 10 to 20 percent of variance to the final number.
Frequently asked questions
What's a good free-trial conversion rate?
Self-serve B2B SaaS averages 6-10%. PLG tools that gate value behind trial activation see 12-18%. Below 4% suggests either a wrong-fit audience or weak activation onboarding.
How big a lift is realistic?
Best-in-class onboarding overhauls deliver 1-3 percentage points. Email sequence tweaks deliver 0.3-0.8 points. Anything beyond 5 points usually means the prior funnel was deeply broken.