Annual vs monthly pricing calculator
See the cash flow benefit of annual plans, the breakeven month, and what your annual discount is actually costing you in deferred revenue.
Enter your monthly price and annual discount. The calculator shows the upfront cash benefit, when monthly customers have paid the same as annual customers, and how churn makes annual plans even more valuable.
Annual vs monthly pricing calculator inputs and results
How this calculator works
The annual plan price is monthly price × 12 × (1 − discount). The breakeven month is annual plan price ÷ monthly price — the point at which a monthly customer has paid the same in total. Before that month, the annual customer has provided less cash in total; after it, the monthly customer has paid more.
Expected lifetime revenue from a monthly plan is ARPU ÷ monthly churn rate — the classic LTV formula assuming constant churn. Annual plan lifetime revenue is shown as the guaranteed upfront amount, since annual customers are locked in for 12 months regardless of intent to renew. Annual customers typically renew at higher rates too, but that compounding benefit isn't modelled here.
About this tool
This tool compares annual upfront pricing against monthly billing for SaaS. Inputs: monthly price, annual discount %, and optional churn rate. Outputs: annual plan price, upfront cash collected, monthly plan revenue over 12 months, breakeven month where the annual plan customer has paid more than a monthly customer, revenue foregone from the discount, and the churn-adjusted expected lifetime revenue for both plans. A secondary section shows how different discount levels affect the cash flow crossover point.
Frequently asked questions
Why offer annual plans at a discount?
Annual plans give you upfront cash, reduce churn (customers who pay annually churn at 2–4× lower rates than monthly), and lock in revenue certainty for planning. The discount is the cost of that certainty. Most SaaS companies offer 15–25% off, which equates to giving 2–3 months free. The optimal discount is high enough to shift customer preference to annual but low enough that the cash-flow and churn benefits outweigh the revenue reduction.
What does the breakeven month mean?
The breakeven month is when the total amount a monthly subscriber has paid exceeds the annual plan price. For example, if your monthly price is $100 and you offer 20% off for annual (so $960/year vs $1,200/year monthly), a monthly customer pays $960 after 9.6 months. Before that point, the monthly customer has paid less in total — so if a monthly customer churns before month 10, you collected more from the annual customer despite the discount. After the breakeven, the monthly customer has paid more.
How does annual pricing affect churn?
Annual customers typically churn at 30–70% lower rates than monthly customers, depending on the product and market. There are two reasons: first, they've made a larger financial commitment and are more likely to work through problems rather than cancel. Second, the renewal decision happens once a year rather than being implicit every month. The true value of annual pricing in most SaaS businesses comes as much from the churn reduction as from the upfront cash.
When should I NOT offer an annual plan?
If your product has strong network effects or lock-in, monthly pricing at full rate may be more profitable over the long term than discounting for annual commitment. Also avoid deep annual discounts (more than 30%) unless you have very high churn on monthly plans — at that level, you may be leaving too much revenue on the table. For early-stage products where churn is high and retention is uncertain, offering annual plans too aggressively can lock customers into a plan that doesn't fit their needs, increasing refund requests and support costs.