How do I calculate my North Star metric when I have both free and paid users?
The short answer
Pick the one number that best proxies for delivered value, not revenue and not signups. For a mixed model it is usually an engagement or usage event that both free and paid users hit (weekly active projects, messages sent, orders placed), because that predicts who eventually pays and who stays. Revenue is a lagging outcome of the North Star, not the North Star itself, so keep them separate on your dashboard.
Go deeper, your way
3 hand-picked resources, 3 link-checked. Pick how you want to dig in.
▶️ Video
✓ Link checkedFreeBeginner
Why we picked it
Sean Ellis coined the North Star idea, so this is the walkthrough straight from the person who popularized it, in plain founder-facing language rather than theory. The full interview is long, but there is a dedicated Picking a North Star metric segment (around the 1:19 mark) worth jumping to first. His rule of thumb, that the metric should reflect core value, be actionable, not a ratio, and able to scale, is the honest gut-check for whether your free-plus-paid number is the right one.
On
Lenny's Podcast (YouTube)by Sean Ellis, interviewed by Lenny RachitskyAbout 95 minutes (North Star segment near 1:19:21)
The North Star should capture the core value your product delivers to users, not revenue itself, though it should correlate with revenue growth.
Ellis warns against a ratio as your North Star: pick a number that can grow, which matters when free and paid tempt you toward conversion-rate framing.
Skip to the Picking a North Star metric segment near 1:19:21 if you only want the metric-selection part rather than the full growth conversation.
Why we picked it
The biggest tracking mistake in an MVP is measuring everything and learning nothing. This Amplitude piece walks you through picking one metric that maps to real customer value and finding the early aha moment that predicts whether people stick around, which tells you the few events actually worth tracking. Treat it as a starting point for focus, not a rule: a small product is still learning what matters, so revisit your metric as you go.
Why we picked it
The One Metric That Matters chapter is still the canonical treatment of picking a single focusing number, and crucially it ties that choice to your business model and stage, which is the real question hiding behind free plus paid. It maps the right metric to model type (SaaS, marketplace, e-commerce and more) with public benchmarks, so you are not guessing what good looks like. Treat it as the reference you return to when your one metric needs to change as you move stages.
From
O'Reilly Mediaby Alistair Croll and Benjamin YoskovitzAround 440 pages
The One Metric That Matters means picking a single number to rally around at each stage and ignoring the rest until it is solved, which forces a decision when free and paid both want attention.
Your right metric depends on your business model, so a freemium SaaS founder and a marketplace founder should not chase the same North Star.
It separates vanity metrics from real ones, useful when free-user counts look impressive but do not predict paid value.
