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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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In the competitive landscape of productivity software, few stories are as compelling as the rise of Notion and its eventual overtaking of the once-dominant Evernote. While product features, user experience, and market timing all played crucial roles, one often overlooked factor in this competitive shift was pricing strategy. This examination of how these two productivity giants approached monetization offers valuable lessons for SaaS executives facing their own competitive challenges.
The Legacy Player: Evernote's Pricing Journey
Founded in 2008, Evernote quickly became synonymous with digital note-taking. The company pioneered the "freemium" model in productivity software, offering a generous free tier with paid upgrades for power users.
Evernote's Initial Pricing Philosophy
Evernote's early pricing strategy focused on conversion through usage. As CEO Phil Libin famously stated, "The easiest way to get a million people paying is to get a billion people using." This approach delivered impressive growth, with Evernote reaching a $1 billion valuation by 2012.
The original three-tier model was straightforward:
- Free: Basic features with upload limits
- Premium ($5/month): Higher upload limits and additional features
- Business ($10/user/month): Team collaboration features and administrative controls
The Pricing Pivots
Between 2015 and 2017, Evernote made several pricing changes that would prove consequential:
- Price increases: Premium jumped from $5 to $7.99/month in 2016
- Feature limitations: The free tier saw significant restrictions, including limiting syncing to just two devices
- Bundling shifts: Features once available in lower tiers moved to higher-priced plans
According to data from Second Measure, Evernote experienced a 44% churn spike following these changes. While the company increased short-term revenue from existing paid users, these moves created vulnerability just as a new competitor was entering the market.
The Challenger: Notion's Strategic Approach
Launched in 2016, Notion entered as a more flexible workspace that combined notes, wikis, databases, and project management. Its pricing strategy proved instrumental to its rapid adoption.
Notion's Pricing Innovation
Notion deployed several pricing approaches that directly countered Evernote's strategy:
- Personal plan value proposition: Offering unlimited notes and blocks in its free tier (after May 2020)
- Education focus: Providing free access to students and educators, building future customer base
- Team-oriented pricing: Creating attractive options for small teams ($8/user/month) that encouraged organizational adoption
The Power of Free-to-Paid Conversion
Notion's approach to monetization focused less on restricting free users and more on creating natural upgrade paths as usage expanded. According to Notion's published case studies, this led to organic growth within organizations, with individual users becoming champions who drove team and enterprise adoption.
A report by productivity software analyst Ronen Menipaz estimated that Notion's approach resulted in a 4x higher conversion rate from free to paid users compared to industry averages for productivity tools.
The Turning Point: Market Response
By 2020, the market had shifted dramatically. According to data from Sensor Tower, Notion's mobile app downloads surpassed Evernote's for the first time in Q2 2020. Web traffic analysis from SimilarWeb showed comparable trends, with Notion's monthly active users growing at 61% annually while Evernote's remained flat.
The Customer Perception Factor
The pricing strategies employed by both companies shaped user perceptions in profound ways:
| Factor | Evernote Perception | Notion Perception |
|--------|---------------------|-------------------|
| Value | Increasingly seen as overpriced | Viewed as high value |
| Trust | Eroded by feature removals | Built through consistent improvements |
| Growth path | Focused on individual premium conversions | Designed for team expansion |
Key Lessons for SaaS Executives
The Notion vs. Evernote pricing battle offers several actionable insights for SaaS leaders:
1. Price Increases Require Clear Value Additions
Evernote's price increases weren't matched with significant new value, creating an opening for competitors. In contrast, Notion regularly added features that justified its pricing structure.
According to Patrick Campbell, CEO of subscription analytics firm ProfitWell, "Price increases without corresponding value improvements lead to a 3-7x higher churn risk in SaaS businesses."
2. Free Tier Strategy Matters More Than Ever
The free tier isn't just about user acquisition—it's about building a conversion pipeline. Notion's generous free offering created goodwill while establishing natural upgrade triggers as usage expanded.
3. Enterprise Growth Often Begins with Individual Users
Notion focused on delighting individual users who then advocated for team adoption. This bottom-up approach proved more effective than Evernote's attempts to sell directly to enterprise.
According to Tomasz Tunguz, venture capitalist at Redpoint Ventures, "The most effective GTM strategies for modern SaaS often start with individual users and expand to teams and departments before reaching enterprise-wide adoption."
Current State and Future Implications
As of 2023, Notion has secured a $10 billion valuation, while Evernote was acquired by Bending Spoons in 2022 for a fraction of its peak valuation. While multiple factors contributed to this outcome, pricing strategy undoubtedly played a significant role.
For SaaS executives, the lesson is clear: pricing isn't merely about revenue optimization—it's a strategic lever that influences market perception, competitive positioning, and long-term growth potential. The companies that recognize this tend to be the ones that transform from challengers to market leaders.
As you evaluate your own pricing strategy, consider not just what the market will bear today, but how your approach builds a foundation for sustainable growth tomorrow. In the end, the most effective pricing strategies don't just capture value—they create it.