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I am a huge fan of the Evernote service. I use it every day and it keeps me sane, especially when I travel and random ideas, thoughts or concerns pop into my head at odd hours.

Earlier this year, I attended a talk given by Phil Libin, Evernote's CEO, in which he described Evernote's freemium business model. It is predicated not just on how many people initially sign up for the service, but on how regularly and often they use the service. Simply put, the conversion rate of people who've used the Evernote service for five months is better than those who have used it for just two. Longer time with free product = better conversion rate to paid product. Not a big surprise, but Evernote's success with freemium provides interesting insights for other digital businesses and underscores the importance of measuring cohort lifetimes, even for a free product or service.

With that in mind it will be interesting to see the business model that Evernote Business, a service whose beta was announced last week, will employ once it launches at the end of this year. Can freemium be as viable for Evernote in the small to mid-sized business (SMB) segment? One can easily envision some of the reduced capabilities in the free product (amount of storage/limited sharing/only email support) while still providing great value so that SMBs use it often.

If you're interested in understanding more about the freemium business model, please download our best practices guides devoted to online business models, or watch our webinar that focuses on this issue as well.