At what point does a generous free tier stop driving growth and start hiding bad retention?

Our free tier adoption was incredible thousands of daily active users who loved the product and used it constantly. We thought converting them to paid would be a simple numbers game.

Instead when we launched paid tiers, conversion was painfully low. It turned out the free version was too good, solving 100% of their problem without forcing them to evaluate its true long-term value.

For founders managing freemium models: how do you draw the line between a great free experience and a paywall that actually drives sustainable conversions?