What is Free Tier?
Definition
A permanent free access level for a subscription service that provides basic functionality without any payment required.
Understanding Free Tier
Unlike free trials (temporary), free tiers provide permanent access to a limited version of the service. This is the 'free' in freemium. Examples include Spotify Free (with ads), Slack Free (limited history), Dropbox Basic (2GB storage), and Canva Free.
Free tiers serve as a customer acquisition channel and create network effects. The limitations are designed to be functional enough for basic users but restrictive enough to incentivize upgrading. For consumers, free tiers are excellent for services used occasionally or while evaluating whether a paid plan is worthwhile.
Related Terms
Freemium
A pricing model that offers basic features for free while charging for premium features, storage, or usage beyond free tier limits.
Free Trial
A limited-time period where users can access a subscription service at no cost before committing to a paid plan.
Tiered Pricing
A pricing strategy where a service offers multiple plan levels with different feature sets and price points to serve different customer segments.
Conversion Rate
The percentage of users who upgrade from a free plan or trial to a paid subscription.