diff --git a/migrations/add_upsell_triggers.sql b/migrations/add_upsell_triggers.sql
index 433d22d..e606a80 100644
--- a/migrations/add_upsell_triggers.sql
+++ b/migrations/add_upsell_triggers.sql
@@ -1,26 +1,14 @@
--- Migration: Upsell triggers (Issue #3)
+-- Migration: Add upsell triggers (Issue #3)
 -- Idempotent
 
 CREATE TABLE IF NOT EXISTS upsell_triggers (
   id UUID PRIMARY KEY DEFAULT gen_random_uuid(),
   user_id TEXT NOT NULL,
-  trigger_type TEXT NOT NULL DEFAULT 'free_limit_50pct',
+  trigger_type TEXT NOT NULL DEFAULT '50_percent_free_limit',
   shown_at TIMESTAMPTZ DEFAULT NOW(),
   converted BOOLEAN DEFAULT FALSE,
+  prompt_variant TEXT DEFAULT 'VARIANT_A',
   UNIQUE(user_id, trigger_type)
 );
 
-CREATE OR REPLACE FUNCTION check_upsell_trigger(p_user_id TEXT, p_call_count INT)
-RETURNS JSONB AS $$
-BEGIN
-  -- Fire at 5th call (50% of 10 free calls)
-  IF p_call_count = 5 THEN
-    INSERT INTO upsell_triggers (user_id, trigger_type)
-    VALUES (p_user_id, 'free_limit_50pct')
-    ON CONFLICT (user_id, trigger_type) DO NOTHING;
-
-    RETURN jsonb_build_object('upsell', true, 'prompt', 'You have used 50% of your free calls. Upgrade for unlimited access.');
-  END IF;
-  RETURN jsonb_build_object('upsell', false);
-END;
-$$ LANGUAGE plpgsql;
+CREATE INDEX IF NOT EXISTS idx_upsell_triggers_user ON upsell_triggers(user_id);
diff --git a/src/monetization/upsell.ts b/src/monetization/upsell.ts
new file mode 100644
index 0000000..748716c
--- /dev/null
+++ b/src/monetization/upsell.ts
@@ -0,0 +1,62 @@
+export interface UpsellTrigger {
+  userId: string;
+  triggerType: string;
+  shownAt: Date;
+  converted: boolean;
+  promptVariant: string;
+}
+
+export interface UpsellEvaluation {
+  shouldPrompt: boolean;
+  promptText?: string;
+  promptVariant?: string;
+  headerKey: string;
+  headerValue: string;
+}
+
+export const UPSELL_PROMPT_VARIANTS: Record<string, string> = {
+  VARIANT_A: "You've used 50% of your free credits! Upgrade to Pro today for 20% off high-volume batches.",
+  VARIANT_B: "Enjoying the speed? Unlock unlimited parallel agent calls with our Pro Tier.",
+};
+
+export class UpsellEngine {
+  private triggers: Map<string, UpsellTrigger> = new Map();
+
+  evaluateFreeUsage(userId: string, currentCallCount: number, freeLimit: number = 10): UpsellEvaluation {
+    const threshold = Math.floor(freeLimit * 0.5); // 5th call out of 10
+
+    if (currentCallCount >= threshold) {
+      const triggerKey = `${userId}:50_percent_free_limit`;
+      if (!this.triggers.has(triggerKey)) {
+        const variant = currentCallCount % 2 === 0 ? 'VARIANT_A' : 'VARIANT_B';
+        const promptText = UPSELL_PROMPT_VARIANTS[variant];
+
+        this.triggers.set(triggerKey, {
+          userId,
+          triggerType: '50_percent_free_limit',
+          shownAt: new Date(),
+          converted: false,
+          promptVariant: variant,
+        });
+
+        return {
+          shouldPrompt: true,
+          promptText,
+          promptVariant: variant,
+          headerKey: 'X-Upsell-Prompt',
+          headerValue: 'true',
+        };
+      }
+    }
+
+    return {
+      shouldPrompt: false,
+      headerKey: 'X-Upsell-Prompt',
+      headerValue: 'false',
+    };
+  }
+
+  getTrigger(userId: string): UpsellTrigger | undefined {
+    return this.triggers.get(`${userId}:50_percent_free_limit`);
+  }
+}
diff --git a/tests/upsell.test.ts b/tests/upsell.test.ts
new file mode 100644
index 0000000..854e3b1
--- /dev/null
+++ b/tests/upsell.test.ts
@@ -0,0 +1,38 @@
+import { describe, it } from 'node:test';
+import assert from 'node:assert/strict';
+import { UpsellEngine } from '../src/monetization/upsell';
+
+describe('Upsell Trigger Engine (#3)', () => {
+  it('triggers upsell prompt when user reaches 5th free call (50% threshold)', () => {
+    const engine = new UpsellEngine();
+
+    // Calls 1-4 should not trigger
+    for (let i = 1; i <= 4; i++) {
+      const evalResult = engine.evaluateFreeUsage('user_123', i, 10);
+      assert.equal(evalResult.shouldPrompt, false);
+      assert.equal(evalResult.headerValue, 'false');
+    }
+
+    // Call 5 should trigger
+    const triggerResult = engine.evaluateFreeUsage('user_123', 5, 10);
+    assert.equal(triggerResult.shouldPrompt, true);
+    assert.equal(triggerResult.headerKey, 'X-Upsell-Prompt');
+    assert.equal(triggerResult.headerValue, 'true');
+    assert.ok(triggerResult.promptText);
+
+    const record = engine.getTrigger('user_123');
+    assert.ok(record);
+    assert.equal(record.userId, 'user_123');
+  });
+
+  it('ensures trigger fires exactly once per threshold (idempotent)', () => {
+    const engine = new UpsellEngine();
+
+    const first = engine.evaluateFreeUsage('user_456', 5, 10);
+    assert.equal(first.shouldPrompt, true);
+
+    const second = engine.evaluateFreeUsage('user_456', 6, 10);
+    assert.equal(second.shouldPrompt, false);
+    assert.equal(second.headerValue, 'false');
+  });
+});