How GPT-5 turned free access into a conversion machine

Usage caps, sneaky nudges, and the psychology of paywalls.

Before I get into today's newsletter, I have a VERY EXCITING thing to share.

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I'll be doing a full deep dive into the tool, and why it's so exciting compared to the incumbents like Hubspot and Salesforce.

But you'll have to wait for that as today we're going through ChatGPTs changes to their pricing model, and why it's such a masterclass in customer psychology.

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The moment I hit the wall. Well, three walls.

A few months back, I cancelled my ChatGPT subscription. I realised that I was using something else more. The free plan was fine - I was able to get by for the use cases I needed it for.

Until recently where I suddenly hit a limit:

Not the end of the world, I thought. I'll just start a new chat. So I started a new chat, until I hit another one.

I tried to find where to change the model to something less than GPT-5, thinking I could get away with it. But I couldn't find it in the UI. I was in a rush, I just wanted to type not scour through the UI.

After a while of hitting paywall after paywall, I'd had enough.

Creating new chats was annoying and I wasn't quite getting what I needed. So I hit 'upgrade' and reluctantly re-started my subscription.

There are sooo many interesting customer psychology tactics here, to name a few:

• ​Loss aversion: I'm told in the banner what I'll be missing out on
• ​Scarcity: I'm told I've run out till a time when I'll have access again, creating frustration
• ​Nudges: There's no 'continue' button, just an exit 'X' and a big upgrade button
• ​Framing: the Plus plan is outlined and an inviting green colour. The free plan looks dead.

The UI means that it feels like a hard paywall, whereas it's actually not.

In the moment, I felt stuck. I felt like I had to continue.

But after reading the fine-print on this screenshot as I was annotating it, I realise you can actually keep going on a lighter model (GPT-4o-mini). The UX just makes it feel like you’ve hit a wall.

And now I feel like an idiot.

But still, it's so interesting - how a usage-based model, with progressive feature gating, has been turned into a high-conversion, high-frustration moment.

It also made me think, this feels new? Was it always like this?

The answer is no.

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A brief history of Chat GPTs Pricing Models

​Plus first came out in Feb 2023 for $20 a month. Over a year later, Pro came out a price point of $200/month - 10x the original

With these, you could either get access to a model or you couldn't. This was a tier-based pricing model, with features gated between levels of subscription, and a very clear delineation between them. The benefit here is that it's really easy to communicate to users - 'you in? Or you out?'.

However, when GPT 5 was launched it was launched to all free users, but with a catch.

It was launched with a usage-based model.

What this means is that you get a certain amount before they cut you off. Specifically, free-tier users can send up to 10 messages every 5 hours. Strictly speaking, it’s still tier-based with usage caps baked into the free tier.

When talking about the launch of GPT 5, the Head of Chat GPT Product at Open AI, Nick Turley, said:

I certainly was fooled.

Under the guise of 'hey we're making our best stuff free for all, enjoy!', what Open AI actually did, was add a mechanism to show a hell of a load of paywalls to free users. The more paywalls you show to people, the more likely they are to convert.

What a genius way to launch a new product feature.

It's almost like a reverse trial, usage based and tier based subscriptions model all at once 🤯 🤯 🤯

Now, I can't find conversion rates anywhere, they're pretty tight lipped. But one of my former clients - Azeem Azhar - did some rough forecasting for conversion rates for Chat GPT.

​On a podcast recently, Nick Turley shared that ChatGPT has 700 million weekly active users (10% of the world’s population) as of today and earlier this year the Verge reported Chat GPT had 20 million paying subscribers. Which is around a 2.9% conversion rate (likely over-predicted, as the 20 million includes Plus, Pro, Team, not just consumer Plus).

I bet you $100 (maybe more..) that the launch of GPT-5 not only led to reactivations of churned users, but a higher conversion rate from free to paid.

The benefit of usage-based pricing is twofold:

1. You can show more paywalls (there's more moments when people 'hit' thresholds)
2. You don't leave money on the table (power users pay more, light users pay less)

However the BIG downside is communication. How do you ensure people understand it, don't get confused and frustrate them too much? That, dear readers, is all about how seamless you bake usage-based pricing into the overall UX.

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So, is there a new product launch playbook for conversion?

Maybe?

I don't think all companies can do this. But I think this move shows a new kind of tactic for SaaS monetisation. Not just free vs paid. Not just usage-based. But hybrid pricing and high-friction UX moments designed to convert in the heat of the moment.

If you’re building product, the lesson isn’t “copy OpenAI’s paywall”. It’s that pricing and UX aren’t separate. They ab-so-lutely need to be designed together.

The way a limit is framed can be just as powerful as the limit itself.

Thanks for reading Growth Dives (all the way to the bottom, wow look at you go). This edition was made possible by Attio 🫶 Go check them out, you get 14 day free to try it out. I'm on my trial now 😎

See you next week!!

Rosie 🕺

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