A dynamic credit-based free trial is a user acquisition model where new users receive a set number of credits to explore a product’s features. Unlike time-based trials, which expire after a set period, credit-based trials are tied to usage. Users consume credits as they interact with the product, and when they run out, they are prompted to upgrade to a paid plan. This model is particularly effective for products where value is directly tied to consumption, such as API calls, data processing, or content generation.

This approach allows potential customers to experience the full value of a product at their own pace. By linking the trial to tangible usage, it ensures that users who see the most value are the most likely to convert, leading to higher-quality customers and reduced churn.

A dynamic credit system works by assigning a cost to specific actions or features within your application. When a user signs up for a free trial, their account is pre-loaded with a specified number of credits. As they use the product, credits are deducted from their balance.

Here’s a breakdown of the key components:

• Credit allocation: Upon signup, users are given a starting balance of credits. This amount should be enough for them to meaningfully engage with the core features and experience an “aha” moment.
• Feature pricing: Each paid feature is assigned a credit cost. For example, an AI writing tool might charge one credit per 100 words generated, while an email marketing platform could charge five credits per email sent.
• Usage tracking: The system continuously monitors user activity and deducts credits in real-time as features are used.
• Progressive exposure: The trial can be structured in tiers, where more advanced features cost more credits. This encourages users to explore the platform while also understanding the value of higher-tier plans.
• Conversion points: When a user’s credit balance runs low, they are prompted with in-app messages to upgrade to a paid plan.

Here’s an example of how a tiered credit system could be structured for a fictional AI-powered design tool:

This tiered structure allows users to sample a range of features, making the value of a paid subscription clear once their initial credits are depleted.

Dynamic credit trials are highly adaptable and can be applied to a wide range of SaaS products. They are most effective when the value of the product is easily quantifiable and directly tied to usage.

Here are a few examples:

• API-based services: A geolocation API could offer a free trial with 1,000 API calls (credits). This allows developers to integrate and test the service in their own applications before committing to a paid plan.
• Creative and content generation tools: An AI video creation platform could provide users with enough credits to generate one or two short videos. As they see the quality of the output, they are more likely to upgrade for more extensive projects.
• Data processing and analysis platforms: A service that cleans and analyzes large datasets could offer a trial based on the number of rows or gigabytes processed. This lets users test the platform with their own data, providing a clear demonstration of its value.
• Marketing and communication tools: An SMS marketing platform could give new users enough credits to send 100 text messages. This is often enough to run a small test campaign and see a tangible return on investment.

While dynamic credit trials are powerful, they come with their own set of challenges and misconceptions that can hinder their effectiveness if not properly addressed.

• Setting the right credit limit: One of the biggest challenges is determining the optimal number of free credits. If the limit is too low, users may not have enough time to experience the product’s full value, leading to low conversion rates. If it’s too high, users may get everything they need without ever needing to upgrade, resulting in lost revenue.
• Communicating value effectively: It’s not enough to simply give users credits; you have to clearly communicate what those credits can be used for and the value of the features they unlock. Without clear in-app messaging, users may not understand the credit system or how to best use their trial.
• Complexity in tracking and implementation: Building a reliable usage and credit tracking system can be technically complex. It requires careful planning to ensure accuracy and real-time updates, which can be a significant engineering investment.
• The risk of analysis paralysis: With so many features available to try, some users might feel overwhelmed and not know where to start. This can lead to them not using their credits at all and abandoning the trial. Guiding users with a clear onboarding process is crucial to avoid this.

To design a free trial-to-paid converter funnel that is both effective and user-friendly, it’s important to follow a set of best practices that guide the user from discovery to conversion.

• Personalize the trial experience: Use the signup process to understand the user’s goals and tailor the onboarding experience accordingly. Suggest specific features to try based on their stated needs to help them reach their “aha” moment faster.
• Use clear and compelling in-app messaging: Don’t let users guess how many credits they have left or what they can do with them. Use persistent UI elements to display their remaining balance and trigger contextual messages as their credits deplete.
• Make the upgrade process seamless: The transition from free to paid should be as frictionless as possible. When a user decides to upgrade, the process should be simple, with clear pricing and a straightforward payment flow.
• Offer a credit top-up option: For some users, the trial may not be long enough. Consider offering a one-time credit top-up for a small fee. This can act as a stepping stone to a full subscription and helps to qualify users who are willing to pay.

While the logic for tracking and decrementing credits is part of your application’s core code, Kinde provides the essential billing infrastructure to manage the conversion from a free trial to a paid subscription.

With Kinde, you can easily set up your paid subscription plans and manage the entire subscriber lifecycle. When a user decides to upgrade after their credits run out, Kinde handles the transition seamlessly. You can define different pricing models, whether they are flat-rate subscriptions or more complex usage-based tiers.

Kinde’s integration with Stripe allows you to securely process payments without having to build and maintain your own payment infrastructure. You can also configure plan upgrade and downgrade policies, giving you full control over how you manage changes in subscriptions. This allows you to focus on building a great product and a compelling trial experience, while Kinde takes care of the complexities of billing and subscription management.

• Create plans
• Plan upgrade and downgrade policies