CEO Phil Libin shares his simple strategy.

The freemium business model involves giving away free service to users and making money when some opt to pay for additional features. One company that has been using this model successfully is Evernote which makes software apps for note taking and archiving.  The company has over 3 million users who use Evernote to store articles, photos, videos and text on its servers for free and retrieve them from their computers and smartphones anytime and anywhere.

The paid version of the app, at $5 a month, offers added features like more storage space and offline access. Almost 2% of all Evernote users are premium customers which makes the company profitable, says CEO Phil Libin. The company introduces new features in their app regularly; some of them free while others available only to paid users. This increases conversions and spreads the word around about the app's utility, both of which helps the company generate revenue.

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