Definition
A subscription billing model where users pay annually instead of monthly. Often offered at a discount (e.g., 30% off) to increase LTV, reduce churn, and simplify retention forecasting.
Annual Discount = (1 - Annual Price / (Monthly Price x 12)) x 100. Example: (1 - $59.99 / $119.88) x 100 = 50% discount. Annual LTV = Annual Price x Average Renewals. Monthly LTV = Monthly Price x Average Months Subscribed.
30-50% off monthly equivalent is standard. Less than 25% does not feel meaningful. More than 60% may devalue the product. A common structure: $9.99/month or $59.99/year (50% off) or $79.99/year (33% off). Test different discount levels — some apps find that a smaller discount with better anchoring converts just as well.
Anchor the annual plan as the default/highlighted option. Show monthly as the comparison (crossed out or grayed). Display per-month cost of annual next to monthly cost. Add a 'BEST VALUE' or 'SAVE 50%' badge. Present the annual savings in dollars ('Save $60/year'). This anchoring approach typically gets 50-70% of subscribers to choose annual.
Annual subscribers have mechanically lower churn because they only make one renewal decision per year vs twelve for monthly. Annual renewal rates are typically 55-70% (per year) vs 85-92% monthly (per month). But because of the longer commitment, annual subscribers generate significantly higher total LTV.
Botsi automatically shows the right price to every user. Stop guessing and start growing.