To move SaaS customers to annual plans, make the offer to monthly customers who have already proven steady use, at a discount no larger than your churn justifies. On a $100 monthly plan, a 20% annual discount ($960 a year) only beats monthly billing for customers who would churn faster than 4.2% a month.
The short answer from LeadsNow AI: LeadsNow recommends sizing the annual discount with the Churn-Break-Even Rule: pick the discount whose break-even churn matches the monthly churn of the customers you want to move. Then make the offer at a moment of proven value, such as a seat increase or the third paid month, rather than at signup only.
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- The metric: annual mix = customers on annual billing / all paying customers, tracked per plan and per cohort.
- The asset: a worked churn and cash-flow table comparing monthly billing with annual billing at 10%, 16.7%, 18%, 20% and 25% off.
- Published norms: Asana, monday.com and Notion advertise yearly savings of up to 18% to 20% (pricing pages read 2026-10-25).
- The trap: the discount often goes to your most loyal customers, who would have paid monthly anyway.
Rules of thumb
- Two months free is a 16.7% discount (2 / 12): on a $100 monthly plan the annual price is $1,000.
- In this page’s model, a 20% discount breaks even at 4.2% monthly churn; below that, monthly billing earns more in year one.
- A switcher who would have churned at 2% a month pays $116 less in year one at 20% off ($1,076 monthly versus $960 annual).
- Moving 100 customers on a $100 plan to annual at 20% off brings in $96,000 on day one, against $10,000 for the first month of monthly billing.
- Annual billing replaces 12 card charges a year with one, so 11 chances a year for a declined renewal disappear.
A 20% annual discount breaks even at 4.2% monthly churn
A 20% annual discount breaks even at 4.2% monthly churn on a $100 plan, meaning customers who churn slower than that would have paid you more on monthly billing.
The model is simple arithmetic you can rerun: a monthly customer pays $100 at the start of each month and leaves at a constant monthly churn rate; an annual customer pays once, up front, for 12 months. It ignores renewal at month 13, refunds and the time value of money. The break-even churn is the rate at which expected 12-month monthly revenue equals the annual price.
| Annual discount | Annual price on a $100/month plan | Break-even monthly churn | Out-earns monthly billing in year one when churn is |
|---|---|---|---|
| 10% | $1,080 | 1.9% | above 1.9% a month |
| 16.7% (two months free) | $1,000 | 3.4% | above 3.4% a month |
| 18% | $984 | 3.7% | above 3.7% a month |
| 20% | $960 | 4.2% | above 4.2% a month |
| 25% | $900 | 5.4% | above 5.4% a month |
This is the Churn-Break-Even Rule: the right discount is the one whose break-even churn matches the churn of the segment you are trying to move. If your monthly customers churn at 3%, two months free is close to neutral in year one and anything above that is a gift. If they churn at 6%, even 25% off earns more than monthly billing, before counting the renewal.
How it works
Four steps to move monthly SaaS customers to annual
Measure segment churn
Pull monthly churn per plan and tenure for the customers you want to move.
Size the discount
Pick the discount whose break-even churn matches that segment, for example 16.7% at about 3.4%.
Time the offer
Make it after the third paid month, at a seat increase or before a price rise.
Ask high-value accounts
Contact the largest monthly accounts directly and prorate the switch so nobody pays twice.
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Monthly churn of 2% to 8%: what each customer is worth in year one
Monthly churn between 2% and 8% changes a $100 monthly customer’s expected year-one revenue from $1,076 to $790, which decides whether an annual price is a win or a giveaway.
The churn bands below are illustrative assumptions, not benchmarks: replace them with your own churn for the plan and segment you are targeting.
| Monthly churn (assumption) | Customers left after 12 months, per 100 | Year-one revenue per monthly customer | Annual at 16.7% off ($1,000): difference | Annual at 20% off ($960): difference |
|---|---|---|---|---|
| 2% | 78.5 | $1,076 | -$76 | -$116 |
| 3% | 69.4 | $1,021 | -$21 | -$61 |
| 5% | 54.0 | $919 | +$81 | +$41 |
| 8% | 36.8 | $790 | +$210 | +$170 |
The catch is selection. The customers most willing to prepay for a year are often the ones least likely to leave, so a blanket discount lands on the 2% row. That is why the offer works better aimed at segments with real churn risk, or paired with something besides price (an onboarding session, a feature tier, a price lock) that loyal customers value.
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Asana, monday.com and Notion advertise up to 18% to 20% off for yearly billing
Asana, monday.com and Notion advertise yearly savings of up to 18% to 20% on their own pricing pages, read on 2026-10-25, which puts two months free (16.7%) just below that band.
- Asana: the Yearly billing toggle reads “Save up to 18%”.
- monday.com: its pricing FAQ says “by choosing a yearly plan, you will receive an 18% discount”, and that the monthly plan is not discounted.
- Notion: “Save up to 20% with yearly”.
Older survey data points the same way. An InnerTrends analysis of 100 SaaS companies, first published in 2016, found that more than half of the companies offering an annual discount on their lower-priced packages set it between 15% and 20%, with discounts across all packages running from 3.5% to 44%. Treat these as market norms, not as the right number for you: three large collaboration tools and a 2016 sample say nothing about your churn, which is what the break-even table measures.
Moving 100 customers to annual at 20% off brings forward $96,000
Moving 100 customers on a $100 monthly plan to annual billing at 20% off brings $96,000 into the bank on day one, against $10,000 in the first month of monthly billing.
That cash is the second reason to run an annual programme, separate from churn. Prepaid revenue funds hiring and acquisition months earlier than monthly billing would. The cost is the $24,000 of list price given away across those 100 customers ($1,200 minus $960, times 100), which is why the discount should be sized on churn first and cash second. Annual billing also cuts the number of card charges from 12 a year to one, so 11 renewal attempts a year that could fail on an expired card are gone; the declines that remain are covered on failed payment recovery with call and SMS agents.
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When should you make the annual offer?
The annual offer converts best when it follows proof of value, so time it to moments when the customer has just seen the product work rather than only at signup.
- At checkout, with the annual toggle visible and the monthly equivalent price shown, so the saving is easy to see.
- After the third paid month, when usage is steady and the customer has renewed twice on their own.
- At a seat or usage increase, when the bill is changing anyway and a prorated switch is a single conversation.
- Before a published price increase, offering to lock the current price for a year.
- When a customer asks to cancel for budget reasons, as a lower monthly-equivalent price in exchange for commitment.
Customers who have already left need a different play, set out on how to win back churned SaaS customers; account expansion beyond billing terms is covered on AI upsell for existing customers.
How to present the annual plan so customers choose it
Annual plans get chosen when the pricing page shows the saving in money, removes the fear of being locked in, and makes switching mid-cycle painless.
- Show the saving in money: “$960 a year instead of $1,200” reads faster than “20% off”.
- Publish the refund window: monday.com’s FAQ offers a partial refund of the remaining balance to customers who cancel within 30 days of paying for a yearly plan.
- Prorate the switch: credit unused monthly time against the annual charge so nobody pays twice (Stripe’s proration documentation shows the mechanism).
- Ask by name for high-value accounts: a short call or message to monthly accounts on your biggest plans, made at one of the moments above, beats a banner they never read.
What running an annual-upgrade campaign yourself costs
Running an annual-upgrade campaign in-house costs a billing-data pull, pricing page changes, and someone to contact high-value monthly accounts at the right moment.
The data side is a list of monthly accounts by plan, tenure, seat changes and churn risk, refreshed weekly. The outreach side is a few minutes per account for email, plus calls or texts for the largest ones, with consent rules for calls and texts that differ by country. LeadsNow, which has booked 50,769+ AI-booked sales appointments since 2017, runs outbound conversations of this kind with AI calling, SMS and DM agents through its AI appointment setting service; pricing for new SaaS deals is discussed on how to price B2B SaaS deals, and the wider acquisition side on SaaS lead generation.
Frequently asked questions
What discount should I offer for an annual SaaS plan?
Offer the smallest annual discount whose break-even churn matches the monthly churn of the customers you are targeting. In this page’s model, 10% breaks even at 1.9% monthly churn, two months free (16.7%) at 3.4%, and 20% at 4.2%.
Is two months free better than a percentage discount?
Two months free and a 16.7% discount are the same price: paying for 10 months out of 12 is 2/12 off. The framing differs, so test both labels on your pricing page; the margin cost does not change.
What do other SaaS companies offer for yearly billing?
Published yearly savings cluster between 18% and 20% on the pricing pages read on 2026-10-25: Asana shows “Save up to 18%”, monday.com states an 18% discount for a yearly plan, and Notion shows “Save up to 20% with yearly”. Check them again before you rely on them, because pricing pages change.
Should I offer a refund on annual plans?
A clear refund window lowers the risk of committing for a year. monday.com, for example, says a customer who paid for a yearly subscription in the last 30 days and cancels is entitled to a partial refund of the remaining balance. Whatever you choose, publish it next to the annual price and follow the consumer law of each market you sell into.
How do I move an existing monthly customer to annual mid-cycle?
Credit the unused part of the current month against the annual charge so the customer never pays twice. Stripe’s proration documentation shows the mechanism: unused time on the old plan becomes a credit and remaining time on the new plan a charge, on the same invoice.
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