[ganeshsridharan]

It is difficult to answer your question without much information about all the numbers.

At a high level, you need decide whether you have figured out a product market fit, calculate CAC (customer acquisition cost), Churn rate for monthly vs annual.

If you are still testing your product and are not sure whether you have a fit then I would recommend continue with monthly plan and don't worry about annual plan. You will learn plenty about your product (based on Churn) from monthly subscribers.

If you are past the product market fit stage, annual plan provides you the best option. a) Average CAC is lower b) Churn is lower c) Most importantly, you generate cashflow by getting more money upfront.

There is also the hybrid option you can try, which is annual contract with monthly payments.

[shoo]

the annual-prepaid cashflow trick is discussed by Jason Cohen in this ancient 2013 microconf presentation, starting at around the 13:20 mark : https://www.youtube.com/watch?v=otbnC2zE2rw

[gnicholas]

This is helpful! I guess one of the things I'm trying to understand is if startups shift from mostly-monthly to mostly-annual at some point in their maturity. It's hard to tell from the outside, since most SaaS products I see offer both subscriptions, and I can't tell what their split is between the two.

[ganeshsridharan]

I have worked in multiple b2b startups and one of them was reasonably successful. Based on what I saw, split ratio changes as the startup matures. Earlier we had mostly monthly sign ups. monthly >> annual. As we hired a bigger sales team and created incentives for them to close on annual contracts annual brought in a significant revenue. More like monthly ~ annual.

It also was based on the market type we went. Initially it was small b2b businesses (employee size of around 50k). Once we started moving up market, the contract amount and deal size increased.