Terms for a freemium product

A freemium product has two contracts in one document: a free service that promises little and can be withdrawn, and paid plans that carry the full rights consumers and businesses have when they pay. The terms have to keep the two apart, say what the free tier is and is not, run upgrades and downgrades without losing the customer's data, set limits and fair use, deal with data and advertising on the free tier, and preserve the supplier's right to change or withdraw the free tier. I draft those terms for a fixed fee of £995, delivered in five working days.

Who this is for

Software businesses in England and Wales offering a permanently free tier of a product alongside paid plans, to consumers, businesses or both, from a note-taking app to a developer tool, who need terms that work for both tiers.

What matters in freemium terms

What the free tier promises and what it does not

The statutory quality rights in the Consumer Rights Act 2015 attach to digital content the consumer pays for, or receives with something paid for, under section 33, so a free tier used on its own is not within them, and the terms should define what the free tier includes, that it is provided as it is without service levels, and that features may be limited or withdrawn. That does not make the free tier lawless: the terms are still a contract, unfair terms rules apply to consumer contracts, and the supplier remains responsible for the security of the data it holds under the UK GDPR.

Paid plans and the rights that come with them

When a user upgrades, the paid plan is a contract for digital content under section 34 of the Consumer Rights Act 2015 for a consumer, with the cancellation right under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 and consent to immediate supply under regulation 37, and the subscription rules under Part 4 of the Digital Markets, Competition and Consumers Act 2024 as they come into force; for a business it is standard terms judged under the Unfair Contract Terms Act 1977. The terms should apply the right set to the right customer, which means a separate section for each.

Upgrades, downgrades and data

The terms should say how a user upgrades and when the paid plan starts, how a user downgrades and what happens to data and features above the free tier's limits (retained but read-only, or deleted after a stated period), and what happens to a paid plan that is cancelled: a return to the free tier rather than closure of the account. A downgrade that silently deletes data is the complaint the terms exist to prevent.

Limits, fair use and abuse

The free tier's limits (storage, users, projects, usage) should be stated in the terms or on a page the terms refer to, with fair use limits for anything unmetered, a prohibition on multiple free accounts to avoid limits, and the supplier's right to restrict or close accounts that abuse the free tier or the acceptable use policy. Unauthorised access and interference with the service are offences under sections 1 and 3 of the Computer Misuse Act 1990, and the terms can say so.

Advertising, data and the free tier's price

Where the free tier is supported by advertising or by data the supplier uses, the terms should say so plainly and the privacy notice should explain the processing and its lawful basis under Article 6 of the UK GDPR, because a free tier paid for with data is a commercial practice consumers must be able to see. Marketing to free users to convert them follows the Privacy and Electronic Communications (EC Directive) Regulations 2003, and cookies and tracking need the consent the same Regulations require.

Liability, withdrawal and the boilerplate

The supplier's liability on the free tier can be limited more widely than on paid plans, but not for death or personal injury caused by negligence, fraud or, for consumers, the rights that apply, and the terms should say so. The supplier should be able to change or withdraw the free tier on notice with a period in which users can export data or upgrade, and the terms should apply English law, exclude third-party rights under section 1 of the Contracts (Rights of Third Parties) Act 1999, and keep the software and content the supplier's under the Copyright, Designs and Patents Act 1988.

What it costs

SaaS terms of service, £995. Your standard customer-facing terms. Five working days.

Buying online forms the engagement on payment. The scope is what the saas and technology contracts page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how your product is sold, delivered and supported
• Service levels you can meet, with remedies that are proportionate rather than aspirational
• A liability position that is defensible and will survive enterprise procurement
• IP and data provisions that fit together rather than contradicting each other
• A commercial note on where you will get pushback and what is worth conceding
• One round of amendments

What is not included

• Negotiating individual enterprise deals, which I quote separately
• Advice on the law of jurisdictions outside England and Wales
• Technical security certification or audit
• Regulatory advice for regulated sectors such as financial services or health

Questions I am often asked

A free user says the product lost their data. Are we liable?

If the terms say the free tier is provided as it is without service levels, liability for loss of data on the free tier can be limited, but not below the data protection obligations you owe for the personal data you hold. The terms limit what can be limited and say so.

Can we withdraw the free tier altogether?

If the terms reserve the right to change or withdraw it on notice with a period for export or upgrade, yes. Users have no paid contract to protect, but a sudden closure without export is the kind of practice that draws complaints and regulators.

Do consumer rules apply to the paid plan even though the product started free?

Yes in substance: the moment a consumer pays, the digital content rights, the cancellation right and the subscription rules apply to the paid plan. The terms treat the upgrade as the start of that contract.

Related guidance and services

• SaaS and technology contracts, £995, the service this page describes
• Contract review, £495
• Data protection agreements and privacy terms, £795
• Free trial terms for a SaaS product
• SaaS terms of service for a consumer app

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: September 2026. Email geoffrey@caesar.co.uk.