As mentioned earlier, the freemium conversion rate is a poor measure of success or potential.
The BBC dot.life blog tells the story of the evernote model.
“..so about 1.5% are choosing to pay - that doesn’t sound a very cheerful state of affairs. But Phil Libin came charging back with a series of spreadsheets and graphs telling a more encouraging story.”
There are two main points that need to be included to create a better picture of evernotes freemium model.
1 The cost
Evernote has costs as low as nine cents per free user, which is partly does to a lot of work being done on the users computer.
(As startup CFO rightly points out, the cost side is a very important element of a freemium model. A large part of Skypes freemium success is do to their p2p infrastructure, which insure very low cost)
2 The pattern of conversion
While only 1.5 convert at this point in time, there is more to the conversion pattern. About half of the new users leave within a few week, a thus create very little cost.
The half that stays almost all remain loyal, and are increasingly likely to upgrade. If this trend continues then the current free users hold a treasure of likely premium costumers.
While not making a profit at the moment, Evernote founder Phil Libin is very positive.
At the moment their policy is full transparency with the numbers, so it will be interesting to follow them in the future. I will be sure to update you here on the blog.
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