Article · About a 12 minute read

Annual plans: Why every SaaS company needs to sell them

Paddle Free Intermediate

This is the clearest single write-up on why an annual plan exists in the first place: it front-loads cash and it holds people through the slow months where monthly customers churn. It lands on the 15 to 20 percent discount range most SaaS companies settle at, and it is honest that annual billing complicates your MRR math, so you go in with eyes open. Treat it as a starting point for sizing your own discount, not a fixed rule.

• The real prize of an annual plan is cash up front plus better retention, not the discount itself, so size the discount only as big as it needs to be to move people.
• 15 to 20 percent off is the common range: below that few people bother, above 30 percent it reads as either desperation or an inflated monthly price.
• Annual billing muddies your monthly revenue and churn numbers, so decide how you will report it before you launch.