HubSpot's freemium gamble

how a free CRM rewired the funnel, widened the moat, and built a platform. A HubSpot CRM story.

Back in 2014, HubSpot had a problem.

Yeah, the company was growing fast. It sold blogging, SEO, email, and automation to mid-market firms, and revenue climbed from about $15 million in 2010 to nearly $78 million by 2013, a jump of more than 400% in just three years. By mid-2014, HubSpot had a little over 11,600 paying customers, each bringing in roughly $8,800 a year on average. Good momentum but Hubspot was pigeonholed as “that marketing software,” not a system the whole company would live in. Useful, yes. Core to the business? Not really.

And in the SaaS world, the system of record matters. If Salesforce sits at the centre of your sales team, everyone else plugs into it. If Microsoft Dynamics powers your customer database, you’re locked in. HubSpot risked becoming an accessory to someone else’s platform.

So at its annual INBOUND conference in September 2014, HubSpot made a move that shocked the audience. It announced its own CRM. And priced it at…zero.

Yes, a free CRM. Marking the beginning of HubSpot's CRM story.

The CRM would roll out to existing customers in early 2015, and this wasn’t a crippled free trial. It offered core features: contact management, deal tracking, email logging. For small and mid-sized businesses that balked at Salesforce’s price and complexity, it was a godsend.

And for HubSpot, it was a wedge.

Once the CRM sat inside a business, sales teams could buy Sidekick (later Sales Hub). Marketing teams could automate campaigns. Service Hub could take over tickets and feedback. In short, get the centre free, then monetize everything around it.

Inside the company, ‘free’ wasn’t a stunt. HubSpot’s product chief articulated four tests for a viable free product: a simple promise, easy adoption, a path to monetization, and ecosystem benefits, and he said the CRM cleared them. By June 2015, HubSpot reported 60,000+ users across its sales products. The bet had worked.

From there, HubSpot kept stacking. In 2016, it rolled out the “Growth Stack,” tying Marketing, Sales, and CRM into a free-to-start bundle so teams could finally work off the same system. By 2018, Service Hub arrived to manage tickets and feedback, turning HubSpot into a customer success tool as well. In 2020 came CMS Hub, letting businesses run their websites on the same backbone as their customer data. And by 2021, Operations Hub closed the loop with syncs and automations to keep everything clean. Each Hub solved a friction point, but all of them plugged back into the same free CRM at the center.

And the results?

From roughly 11,600 paying customers in 2014, by the end of 2024, that number had ballooned 21 times to nearly 248,000 across 135 countries. Revenues over the same period jumped 34 times from $116 million to $2.6 billion. Average revenue per customer nudged up too, from about $8,900 in 2014 to $11,300 in 2024. It was not an astronomical jump, but this move was never about squeezing more out of each customer. It was about multiplying the base.

It is hard to attribute every dollar to ‘free.’ But the sequencing is logical and documented. Remove the price and complexity friction at the core (CRM). Make the adjacent Hubs compelling. Then let the flywheel of usage, data, and integrations compound.

And why did this work?

1) Price as strategy (not a discount). Free CRM wasn’t generosity; it was distribution. HubSpot’s own rationale in 2015 stressed: make adoption effortless, then monetize with adjacent, higher-order jobs (automation, sales acceleration, service, CMS). That’s classic freemium economics, CAC relief via a product that sells itself, but crucially, HubSpot stated the “path to monetization” upfront.

2) One data spine, many jobs. The bet only pays if the add-ons feel native. Service Hub (tickets/knowledge base), CMS Hub (content), and Operations Hub (data sync/BI datasets) weren’t random launches, they expanded the surface area of value without forcing customers into new vendors or data silos.

3) Narrative that matches product reality. The flywheel story resonated because HubSpot could operationalize it: free entry, connected Hubs, partner ecosystem, and a single customer record. (This isn’t a slogan, there’s a public page detailing the model and why HubSpot replaced the funnel.) 

 CRM is not just another piece of software. It is the backbone of how businesses manage customers, sales, and growth. And by giving it away for free, HubSpot did not just win users, it rewired the way companies thought about adopting software.

For now though, every time you hear “freemium,” you’ll know it’s more than a gimmick. Done right, it can change the trajectory of an entire company. Of course, “free” is not always the golden ticket. Plenty of companies have tried the freemium playbook and stumbled. If the free tier is too weak, nobody bothers to use it. If it is too generous, users never feel the need to upgrade. LogMeIn shut down its free product in 2014 because upgrades never caught up with the cost of supporting millions of non-paying users. SugarSync abandoned freemium in 2013 for the same reason. Industry studies put average free-to-paid conversion at just 2 to 5 percent, which means most businesses cannot make the economics work without a very sharp plan.

That is why HubSpot’s move stands out. The free CRM was not just bait. It was sticky enough to get adopted, but limited enough that serious teams quickly needed Sales Hub, Marketing Hub, or Service Hub. In other words, the free core created dependence and the paid Hubs unlocked the real power. Compare that to others who offered free products without a clear upgrade ladder. They ended up footing the bill for users who never turned into customers. HubSpot avoided that trap, and that is what turned a risky bet into a billion dollar engine.

If this story helped you see how a simple free product turned HubSpot into a multi-billion-dollar platform, share it with a friend, a colleague, or even that one person in your WhatsApp group, on X, or on Instagram who never stops talking about wild business stories.

They might just look at “free” very differently after this.