Annual plan? Find the discount that pays.
An annual plan stops members leaving mid-year, and gives a discount to the ones who never would have. See which one wins for your membership, and how big a discount you can afford.
Two forces, one question.
An annual plan pays you for churn that doesn't happen, and charges you a discount for it. Whether that's a good deal depends on who picks it.
The lock-in
What you gain
Nobody on an annual plan can cancel in month four. Every member who would have drifted off mid-year now pays for the whole year, and the money arrives on day one.
The discount
What it costs
Everyone who picks annual gets it, including the members who'd have happily paid full price every month for years. The keener your annual members, the more of the discount is money you'd have earned anyway.
The rule of thumb
A member who'd have cancelled mid-year on monthly pays for the whole year on annual, then doesn't renew. So if the annual plan does nothing else, it pays over a member's life when:
discount < the share of year one they'd have skipped on monthly
If the people who pick annual would have paid for about 9 of their first 12 months on monthly, anything under 25% off pays. If they'd have paid for 11, only about 8% off does. Your lifers skip almost nothing, so for them the discount is a gift. If annual also keeps some people who'd have left, you can afford a bit more.
62% vs 41%
Median customer retention rate on annual vs monthly plans, for software under $25 a month.
ChartMogul, 2,500 SaaS companies20%
The median annual discount. 104 of the 585 offer "two months free" instead, which is about 17%.
CostBench, 585 productsMonth 2
When monthly customers are most likely to upgrade to annual: over 3× likelier than in month 9.
ChartMogul, 2024 cohortsThose are software numbers, not membership ones, and the retention gap mixes two things: keener people choosing annual, and annual keeping people. Nobody can tell you the split, so the simulator keeps them as two separate guesses and shows the answer at both ends.
Make annual earn its keep.
The best annual plan catches members while they're keen and before they drift. Here's how to set that up on your Webflow site.
See how monthly and annual prices work in Memberstack. Thinking about the monthly price too? Try the price change simulator. Weighing a free trial or a one-off lifetime price instead? Try the free trial simulator or the lifetime deal calculator.
What this model leaves out.
It's built to answer one question clearly. Here's where that clarity costs accuracy.
Keenness is a guess
How long your annual members would have stayed on monthly decides everything, and you can't measure it before you launch. Neither can you measure how many extra renewals annual brings on its own. Treat the break-even as the real output: it tells you how keen they can be before the discount stops paying.
Same signups either way
A cheaper-per-month annual price might win a few people who'd never pay monthly. The model doesn't count them, so if annual brings in new members, it's doing better than shown.
Non-renewers are gone
Members who don't renew are counted as gone. Some will drop back to monthly instead, which makes annual look a little better than shown. Refunds on annual plans aren't counted either, and work the other way.
Cash now, at face value
Money in the bank today is worth more than the same money spread over a year, and one charge a year saves eleven sets of card fees. Neither is counted, and both favour annual.
Questions about annual plans
How the simulator works, where the numbers come from, and what happens to the numbers you type in.
It depends on how keen the members who pick it are. An annual plan locks members in for a year, so the months a monthly member would have cancelled through get paid for. The cost is the discount, which also goes to members who'd have stayed all year anyway. If annual does nothing else, it pays when the discount is smaller than the share of their first year those members would have skipped on monthly: if they'd have paid for about 9 of 12 months, anything under 25% off pays; if they'd have paid for 11, only about 8% off does. The simulator works it out for your own price, churn and guesses.
Two discounts dominate: 20% off and "two months free" (about 17% off). In CostBench's Q3 2026 data, the median among 585 software products that state an annual discount is 20%, and 229 of them sit on exactly 20% or 17%. Recurly, looking at over 1,000 companies, found 16.7% the most common, and that industries with higher churn tend to offer bigger discounts, which is what the maths says they can afford. Stay comfortably under the biggest discount that still pays: roughly the share of the first year your annual members would have skipped on monthly, a little more if annual itself keeps some people who'd have left. The simulator gives you that ceiling, and the closer you sit to it, the less room there is for your guesses being wrong.
The same number works from both sides. For the member, an annual plan at 20% off costs 12 × 0.8 = 9.6 months of the monthly price, so it pays for them if they'd have stayed longer than 9.6 months. For you, it's the mirror image: if annual does nothing but hold people to the year they paid for, it earns more than monthly when the members who pick it would have paid for fewer than 9.6 of their first 12 months. At two months free (16.7% off) the line is 10 months. Members who'd have paid for all 12 get the discount as a gift, which is why it matters who picks annual.
Annual members keep paying more often, but not all of that is the plan's doing. In ChartMogul's SaaS Billing Report 2025, companies with average revenue under $25 a customer had a median customer retention rate of 62% on annual plans against 41% on monthly. Part of that gap is that the people who choose annual were keener to begin with, and part is annual keeping people who'd have left. Nobody can tell you the split, so the simulator takes each as its own guess and shows the answer at both ends.
Yes. Two months free means paying for 10 months out of 12, which is 2 ÷ 12 = 16.7% off the monthly price over a year. One month free is 8.3% off and three months free is 25% off. "Months free" often reads as more generous than the same percentage, which is one reason it's popular.
It fits best where members get value every month and would otherwise drift off mid-year: a community, a library you keep adding to, or coaching that runs all year. That's where locking in a year earns the most. The catch is that the members most likely to leave early tend to be the least likely to pick annual, so the people who do pick it are often the ones who'd have stayed anyway. If your membership is a course people finish in a few weeks, few will pay a year up front for it, and an annual plan mostly discounts your keenest buyers. A one-off price can suit that better, as long as it's priced to cover what it gives away.
Both bring cash in on day one. An annual plan gives away a discount for one year, then members pay again or leave. A lifetime deal trades every future payment for one, so it costs you more the longer a buyer would have stayed, and it keeps costing you support and upkeep with no end date. If you need cash and have members who'd pay monthly, an annual plan is usually the safer way to raise it. Memberstack's free lifetime deal calculator shows the lowest lifetime price that would still pay.
Early. ChartMogul found that upgrades from monthly to annual peak in a customer's second month: customers who joined in January 2024 were over three times more likely to upgrade in their second month than their ninth. Once a new member has seen the value, a nudge in months two to four catches them while they're keen.
Built by the team at Memberstack, where over 10,000 businesses run their memberships.