Monthly vs Annual Subscription Pricing: How to Offer Both Without Losing Money

Should you charge monthly or yearly for your subscription? For most online businesses, the answer is both. Monthly is the easy yes for a new member. Yearly gets you paid up front and gives the member a reason to stay for a full year. Offer monthly as the default, add a yearly plan with a clear saving, and make the yearly choice easy to find at checkout and again after a few months of membership.

If you sell a membership, a coaching program, a software tool or a monthly box, this choice shapes your cash flow more than almost anything else on your price page. Here's how to think about it.

What's the difference between monthly and annual pricing?

Monthly pricing bills a member every month until they cancel. Annual pricing bills once for the whole year, usually at a lower total than twelve monthly payments.

Neither one is better on its own. They do different jobs, which is why most subscription businesses offer both.

When monthly pricing works best

Monthly works best when the member is still deciding whether you're worth it. A low first payment removes most of the risk for them. That makes monthly the right default for:

• A new membership or community that people don't know yet

• Products where results take a few weeks to show

• Buyers who found you through an ad or a social post and haven't bought from you before

The tradeoff is that every billing date is a chance to leave, on purpose or by accident. A card expires, a payment fails, and the member is gone without ever deciding to cancel.

When annual pricing works best

Annual works best when the member already trusts you. It's a strong fit for:

• Members who have been with you a few months and use what you sell every week

• Products tied to a yearly rhythm, like a planning program, tax season or a school year

• Businesses that need cash up front to build the next thing

You also get fewer billing dates, so fewer chances for a failed payment to end a membership.

How to price the yearly plan

Most businesses price the yearly plan below twelve times the monthly price, so the member can see what they save. There's no single right discount. Pick one you can afford, state it in plain words ("Save 25% when you pay yearly" or "Get two months free"), and test it.

A few rules keep it simple:

1. Show the saving next to the yearly price. Don't make people do the math.

2. Keep the same benefits on both plans. If yearly members get more, say exactly what.

3. Put the monthly price first for new visitors. Lead with the easy yes, and show yearly as the upgrade.

4. Tell members before a yearly renewal. A surprise charge is the fastest way to lose a good member and get a refund request.

Offer the yearly plan more than once

The checkout isn't the only place to offer yearly. Some of the best moments come later:

• Right after the first purchase. A member who just paid monthly is already sold. A one-click offer to switch to yearly at a saving can land well here.

• After a few good months. A member who has stayed and used your product is the best candidate for yearly.

• When they try to cancel. Instead of letting them go, offer a lower yearly price or a pause.

How to stop losing monthly members to failed payments

Monthly plans have one big leak: payments that fail. Cards expire, get lost or get replaced, and the member never meant to leave. Retrying the card and reminding the member to update it can save many of those memberships. This is called dunning, and every subscription business should have it running.

How to set up monthly and annual plans in SamCart

SamCart lets you sell subscriptions at checkout and bills your customers on schedule. You can set up monthly subscriptions, annual subscriptions, free trials, dollar trials and payment plans. A few SamCart features help with the ideas above:

• Subscription Saver (on the Pro plan) works to recover at-risk subscriptions with retry logic and customer outreach, so a failed card doesn't quietly end a membership.

• 1-Click Upsells and Order Bumps (on Pro) let you offer the yearly plan right after the first purchase or on the order page.

• A/B Testing (on Pro) lets you test two prices or two ways of showing the yearly saving.

• The Customer Portal lets customers manage their own subscriptions and update their cards without filing a support ticket.

SamCart's own pricing works the same way: Core is $79 a month and Pro is $199 a month, with 25% off when you pay yearly and a 7-day free trial. You can see the plans on the pricing page and the subscription features on SamCart Subscriptions.

How to test which pricing makes you more money

Don't judge a pricing change by sign-ups alone. A cheaper monthly plan can bring more sign-ups and less money. Track three numbers for each version:

1. How many people start a plan

2. How many are still paying after three months

3. How much each member paid you in total

The version that wins on the third number is the one to keep.

Ready to set up your plans? Start a free trial of SamCart.

Related reading: How to start a subscription business and How to create a membership site.