✓ Break-even conversion· Free burn vs paid revenue· report an issue →
Your free tier burns LLM tokens on users who pay nothing, and your paying users are supposed to cover it. But at what conversion rate does that actually work? Enter your signups, free-user usage, model prices and paid plan to see the monthly net, the break-even conversion rate, how many free users each paying customer subsidises, and a sweep showing where the free tier flips from growth engine to money pit.
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net / mo
—paid revenue / mo
—free burn / mo
—break-even conv.
Conversion sweep — where free stops costing you money
The same app priced across a range of conversion rates. Conversion is the input you are least sure of and it swings the answer the most, so the whole curve is more honest than a single guess. The break-even row is where net crosses zero.
Conversion
Paid users
Net / month
Free users are not free when they cost tokens
The freemium playbook was written for software with near-zero marginal cost: give the product away, let a giant free base do your marketing, convert a sliver to paid, and the free riders cost you almost nothing. AI apps broke that model. Every free chat, image or agent run has a hard token cost that lands on your provider invoice the moment it happens, so a hundred thousand free users can quietly cost you five figures a month before anyone pays a cent. Freemium still works — but only when the gross margin on your paying customers covers not just their own serving cost but the entire subsidy of the free tier they arrived with. That turns the whole business into one number you can actually solve for: the break-even conversion rate. Price your free usage too generously, your paid plan too thin, or assume a conversion your funnel never hits, and the free tier flips from a growth engine into a burn you cannot outrun. This calculator prices the free burn and the paid revenue side by side, computes the exact conversion you need to break even, and sweeps the whole curve so you can see the cushion — or the cliff — before you set the pricing. Pair it with the cost-per-user calculator to nail the per-seat number, the AI SaaS margin calculator for the blended picture, and the AI wrapper pricing calculator to set the paid plan that makes the whole thing work.
The cost per call is your token split priced out: input tokens times input price plus output tokens times output price, divided by a million. A free user's monthly cost is that times their calls per month — capped if you set a free usage limit — and a paid user's cost is the same times their calls. From your signups and conversion rate, the paid users are signups times conversion and the free users are the rest. Free burn is free users times free cost each; paid revenue is paid users times the plan price; paid serving cost is paid users times paid cost each. The monthly net is revenue minus free burn minus paid serving cost. The break-even conversion rate is the free cost per user divided by the sum of that free cost and each paying user's net contribution (plan price minus their serving cost) — the exact conversion where revenue equals total cost. The subsidy figure is how many free users one paying customer's net contribution can cover. The sweep re-runs the whole calculation across a range of conversion rates so you can see where net crosses zero and how steep the climb from loss to profit is. Every figure is a monthly steady-state estimate; real apps have ramps, churn and mixed usage, so treat it as the shape of the economics rather than a forecast to the dollar.
Frequently asked questions
How does a freemium AI app lose money on free users?
Unlike zero-marginal-cost software, every free AI request bills you real tokens. A free user sending twenty half-cent calls costs a dime a month, and a hundred thousand of them cost twelve thousand dollars before anyone pays. Only paying users' gross margin covering both their own cost and the free riders' makes it work.
What is the break-even conversion rate?
The fraction of signups that must upgrade for revenue to cover serving everyone. It equals free cost per user divided by that free cost plus each paying user's net contribution. Cheap free usage and rich paid plans push it below a percent; generous free tiers and thin pricing push it past the 2–5% real apps convert at — the danger zone.
How do I control free-tier cost without killing growth?
Cap free usage to bound the liability, route free traffic to a cheaper model, and cut per-call cost with caching and tighter outputs. On revenue, raise the paid price or improve conversion. Set the free cap above zero here and switch the model preset to watch the net and break-even move.
Why a conversion sweep instead of one number?
Conversion is your least-certain input and swings the answer most — profitable at 3%, underwater at 1%. The sweep shows where break-even sits and how much cushion you have if real conversion comes in below plan, turning "is it profitable?" into "what conversion do I need, and is it realistic?"