how-does-evernote-make-money-evernote-business-model

How does Evernote make money? The Evernote business model in a nutshell

  • Evernote is a note-taking, organizing, task management, and archiving app created by the EverNote Corporation. The company was founded in 2001 by Russian-American entrepreneur Stepan Pachikov to increase the capacity of human memory.
  • Evernote works on the freemium business model. This means users can try out the basic product for free and upgrade to the premium service if so desired. The company is adept at turning free customers into paying customers the longer each utilizes the platform.
  • Evernote has a simple revenue generation strategy, with three premium subscriptions for personal users, employees, and organizations.

Origin story

Evernote is a note-taking, organizing, task management, and archiving app created by the EverNote Corporation. The company was founded in 2001 by Russian-American entrepreneur Stepan Pachikov. 

Pachikov created Evernote to extend the human memory and make things easier to find, suggesting that the human memory was fragile and unreliable:

We all have hundreds of thousands of pieces of information, but it’s useless if we can’t find any of it. In business, the worst thing we can say is, ‘Oh, I’m sorry, I forgot your name.’”

The original EverNote incorporated the handwriting recognition technology that Apple underutilized in Newton, an early personal digital assistant first released in 1993.

Launched for Windows in 2004, users could write notes the old-fashioned way and search for specific notes according to date, keyword, topic, location, or contacts.

Pachikov met Phil Libin in 2007, a man with strong business acumen whom he believed could take the company forward.

Libin was subsequently appointed CEO and grew Evernote by steering the app away from desktops and toward the new frontier in smartphones.

Four years later, Evernote boasted 11 million users as engineers worked tirelessly to ensure the app was ready as each new app marketplace was launched.

The company raised four successful rounds of funding between 2010 and 2014 with Evernote enjoying gradual, steady, and entirely organic growth. Flush with cash, the company then embarked on a series of disastrous product launches.

One such product, Evernote Food, failed predominantly because it pre-dated the food-selfie era and was too similar to the core platform. Despite these setbacks, Evernote achieved unicorn status during this period in May 2012.

Today, Evernote remains the most popular app for life organization, note-taking, and project planning with over 225 million active global users. The platform has inspired the creation of many similar services, including Microsoft OneNote, Google Keep, Hive Notes, and Dropbox Paper.

Evernote revenue generation

Evernote works on the freemium business model. This means users can try out the basic product for free and upgrade to the premium service if they choose to do so.

The company has a proven track record of converting casual users into paying customers. While just 0.5% of new users purchase a premium service, this number increases to 7% after one year of use, 11% after two years, and 25% after four to five years.

With that said, let’s take a look at the premium offerings in more detail.

Premium subscriptions

For individuals and teams, there are three premium subscriptions to choose from:

  1. Personal ($7.99/month) – ideal for home and family use, the Personal subscription allows users to sync unlimited devices with 10 GB in monthly uploads.
  2. Professional ($9.99/month) – a plan more suited to workplaces with 20 GB monthly uploads and integration with Slack, Salesforce, Microsoft Teams, and others.
  3. Teams ($14.99/user/month) – an enterprise solution for an unlimited number of devices, centralized account administration, and a dedicated success manager for teams with 25 or more seats.

Main Free Guides:

RelatedWhat Is A B2B2C Business Model?

Related Business Model Types

Platform Business Model

platform-business-models
A platform business model generates value by enabling interactions between people, groups, and users by leveraging network effects. Platform business models usually comprise two sides: supply and demand. Kicking off the interactions between those two sides is one of the crucial elements for a platform business model success.

Marketplace Business Model

marketplace-business-models
A marketplace is a platform where buyers and sellers interact and transact. The platform acts as a marketplace that will generate revenues in fees from one or all the parties involved in the transaction. Usually, marketplaces can be classified in several ways, like those selling services vs. products or those connecting buyers and sellers at B2B, B2C, or C2C level. And those marketplaces connecting two core players, or more.

Network Effects

network-effects
A network effect is a phenomenon in which as more people or users join a platform, the more the value of the service offered by the platform improves for those joining afterward.

Asymmetric Business Models

asymmetric-business-models
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus have a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility.

Attention Merchant Business Model

attention-business-models-compared
In an asymmetric business model, the organization doesn’t monetize the user directly, but it leverages the data users provide coupled with technology, thus having a key customer pay to sustain the core asset. For example, Google makes money by leveraging users’ data, combined with its algorithms sold to advertisers for visibility. This is how attention merchants make monetize their business models.

Wholesale Business Model

wholesale-business-model
The wholesale model is a selling model where wholesalers sell their products in bulk to a retailer at a discounted price. The retailer then on-sells the products to consumers at a higher price. In the wholesale model, a wholesaler sells products in bulk to retail outlets for onward sale. Occasionally, the wholesaler sells direct to the consumer, with supermarket giant Costco the most obvious example.

Retail Business Model

retail-business-model
A retail business model follows a direct-to-consumer approach, also called B2C, where the company sells directly to final customers a processed/finished product. This implies a business model that is mostly local-based, it carries higher margins, but also higher costs and distribution risks.

B2B2C

b2b2c
A B2B2C is a particular kind of business model where a company, rather than accessing the consumer market directly, it does that via another business. Yet the final consumers will recognize the brand or the service provided by the B2B2C. The company offering the service might gain direct access to consumers over time.

Crowdsourcing Business Model

crowdsourcing
The term “crowdsourcing” was first coined by Wired Magazine editor Jeff Howe in a 2006 article titled Rise of Crowdsourcing. Though the practice has existed in some form or another for centuries, it rose to prominence when eCommerce, social media, and smartphone culture began to emerge. Crowdsourcing is the act of obtaining knowledge, goods, services, or opinions from a group of people. These people submit information via social media, smartphone apps, or dedicated crowdsourcing platforms.

Open-Core Business Model

open-core
While the term has been coined by Andrew Lampitt, open-core is an evolution of open-source. Where a core part of the software/platform is offered for free, while on top of it are built premium features or add-ons, which get monetized by the corporation who developed the software/platform. An example of the GitLab open core model, where the hosted service is free and open, while the software is closed.

Open Source vs. Freemium

open-source-business-model
Open source is licensed and usually developed and maintained by a community of independent developers. While the freemium is developed in-house. Thus the freemium give the company that developed it, full control over its distribution. In an open-source model, the for-profit company has to distribute its premium version per its open-source licensing model.

Freemium Business Model

freemium-business-model
The freemium – unless the whole organization is aligned around it – is a growth strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through the sales funnel. Free users will help spread the brand through word of mouth.

Freeterprise Business Model

freeterprise-business-model
A freeterprise is a combination of free and enterprise where free professional accounts are driven into the funnel through the free product. As the opportunity is identified the company assigns the free account to a salesperson within the organization (inside sales or fields sales) to convert that into a B2B/enterprise account.

Franchising Business Model

franchained-business-model
In a franchained business model (a short-term chain, long-term franchise) model, the company deliberately launched its operations by keeping tight ownership on the main assets, while those are established, thus choosing a chain model. Once operations are running and established, the company divests its ownership and opts instead for a franchising model.
Scroll to Top
FourWeekMBA