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    PricingLast updated: 2025-Q26 data points

    SaaS Annual vs. Monthly Billing Statistics 2025

    Annual billing is one of the highest-ROI pricing changes available to most SaaS companies, yet fewer than 40% of SaaS customers are on annual plans across the industry. Profitwell data demonstrates that annual plan customers churn 60–70% less than monthly plan customers in year one — an extraordinary retention differential. The economic case is even stronger: annual billing improves cash-flow predictability, reduces involuntary churn from payment failures, and allows the business to invest in customer success earlier in the relationship. The standard annual discount is 15–20% off monthly rates; offering more than 20% rarely improves conversion proportionally. Companies that default new customers to annual billing (opt-out rather than opt-in) see 40–60% higher annual plan adoption.

    MetricValueSourceYearContext
    Industry Average Annual Plan Adoption38%Profitwell by Paddle 20242024Only 38% of SaaS customers are on annual plans — the majority are still on month-to-month, representing a major retention and cash flow opportunity.
    Annual vs. Monthly Churn Rate Differential60–70% lower for annualProfitwell by Paddle 20242024The single most impactful retention intervention in SaaS is moving customers from monthly to annual billing — the churn differential is enormous.
    Optimal Annual Discount vs. Monthly15–20%Profitwell by Paddle 20242024Discounts above 20% improve annual plan conversion marginally while reducing yield significantly — 15–20% is the efficient frontier.
    Annual Plan Adoption: Default Annual vs Monthly+40–60% for default annualProfitwell by Paddle 20242024Defaulting to annual billing in the signup flow dramatically increases adoption — choice architecture is a more powerful lever than discount size.
    Cash Flow Impact of 50% Annual Plan Mix5–7 months of revenue in advanceChartMogul SaaS Benchmarks 20242024A healthy annual plan mix creates a natural deferred revenue cushion, reducing reliance on external capital for growth investment.
    Annual Plan Adoption, Enterprise SaaSEnterprise85–95%KeyBanc Capital Markets SaaS Survey 20242024Enterprise procurement processes almost universally produce annual or multi-year contracts — the annual plan adoption challenge is specific to SMB and mid-market.

    Methodology

    Profitwell by Paddle (n=22,000+ companies), ChartMogul SaaS Benchmarks, OpenView Partners SaaS Benchmarks. Annual plan defined as 12-month upfront billing commitment.

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