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Annual plans look like a discount, but they often collect more total revenue per customer.
The reason is simple: churn. Monthly customers can cancel any time, so most leave long before they'd have paid a full year. Annual customers pay it all upfront.
Plug in your numbers below. This calculator compares both billing models side by side - total revenue per customer and what each unconverted SaaS trial costs you under either model.
How long paying customers stay on average.
Which model collects more per customer?
| Metric | Monthly | Annual |
|---|---|---|
| Price / month | $49 | $39 (equiv) |
| Avg lifetime | 20 mo | 12 mo |
| Total revenue per customer | $980 | $470 |
What unconverted SaaS trials cost you
Total revenue lost from unconverted SaaS trials each month, based on what each customer would have paid over their lifetime.
Total revenue lost (monthly billing)
$0
Total revenue lost (annual billing)
$0
What if you converted more?
See how a small improvement in trial conversions impacts your revenue.
| Metric | Monthly | Annual |
|---|---|---|
| Additional total revenue | $0 | $0 |
How this is calculated
Total revenue per customer (monthly billing) = monthly price x average customer lifetime in months. Total revenue per customer (annual billing) = discounted monthly price x 12 months x number of full years in their lifetime. Break-even discount = the maximum annual discount where annual billing still collects more per customer than monthly. These are simplified estimates. Actual revenue depends on renewal rates, expansion, and plan mix.
Frequently Asked Questions
Should I offer annual pricing for my SaaS?
It depends on your churn rate. If your average monthly customer leaves before paying a full year, annual billing locks in more revenue upfront - even with a discount. Annual plans also improve cash flow and reduce involuntary churn from failed payments. Most SaaS companies benefit from offering both options.
What annual discount should I offer?
Most SaaS companies offer between 10% and 20% off the monthly price for annual billing. The right discount depends on your customer lifetime - use the calculator above to find the break-even point where annual billing still collects more total revenue than monthly.
Why does annual billing sometimes collect more than monthly?
Churn is the key factor. Monthly customers can cancel any time, and most leave well before paying the equivalent of a full year. Annual customers commit upfront, so even with a discount, you collect 12 months of revenue guaranteed. The shorter your average customer lifetime, the bigger the advantage of annual billing.
Also try our SaaS Trial Conversion Calculator to see the full cost of unconverted SaaS trials.
Learn how TrialMonitor improves SaaS trial conversion with real-time segmentation.