Should you always offer a monthly plan… or can you go straight to annual?
Hey PH! I'm a bit obsessed with Pricing, and just started testing a new experiment for my startup, @Pretty Prompt:
Remove the monthly tier; offer only Free or Yearly (basically no monthly plan available).
We decided to do this after doing some simple maths and seeing that 42% of users today choose annual vs our monthly plan.
So what if I can take out the monthly option entirely?
Has anyone here done something similar or has experience with this?
I think a big part of PMF is also a different type of PMF (aka Pricing Market Fit).
Does removing monthly pricing hurt conversion… or actually make pricing clearer and push more users toward longer commitment?
So then I did a bit of research:
@Screen Studio
Monthly + heavily discounted annual ($29/mo vs $9/mo billed annually). Clear push toward yearly. And no Free option. (BTW I LOVE THIS PRODUCT. I use it ~3/week and it's one I always recommend to others.)Send.co
Free or $20/user/month. No annual plan. Super simple, low cognitive load.Fin (Intercom)
Pay-per-outcome (~$0.99 per resolution). You only pay for value delivered, but costs can be harder to predict. I don't know how I'd feel as a founder implementing this today. Given that more people can ask more questions (cos form a user perspective, we all ask AI stuff all the time), I can only see this going up.@Basecamp
If you want unlimited, it's a flat $299/month billed annually. Whether you're a small startup or an enterprise, they will never charge you more than that. (And they make it clear you get direct access to the CEO -> a great, great push for yearly).
Open to another pair of eyes! If you were designing SaaS pricing today, would you still include monthly billing by default, or less is more?
Replies
Feels risky removing month completely. Some users just need a low-commitment entry point before trusting yearly.
Pretty Prompt
@nora_mitchell i thought about this too... Also the monthly plan can help anchor and convince people to pay for yearly (cos of the savings)
As an end-user I'd prefer having a monthly option in any product - I'm usually not keen to get locked into an year subscription
Pretty Prompt
@sk_uxpin I agree, though for some tools like Cursor or Raycast, or Screen Studio I'd happily pay for annual, I use them so much!
@ilaiszp fair point, Cursor and other similar tools are amazing, but we're leaving in such times when you never know what's going to get released tomorrow - and I love tinkering and playing with new things
Feels like this could work well if your brand trust is already strong, but risky if you still rely on discovery traffic.
Pretty Prompt
@ryan_cooper9 I'm currently experimenting it - we do have a good user base (40k users, 130+ 5-star reviews) but who knows 🫠
I'll share any findings next week!
revenuecat realised a bunch of data on this exact point actually. Always best to offer annual as the default, with a choice to move to a monthly option. I did this for my startup and noticed a material amount of signups trialling the annual version over monthly (with a few annual conversions as well)
Pretty Prompt
@daniel7789 Interesting, so you get the annual to be the default from the toggle?
Sometimes folks want a lower-commitment option, so monthly can attract those users. I've been doing quarterly recently for some of my products.
Pretty Prompt
@rohan_108 Ohh quarterly is an interesting take, I didn't think of it
Are you planning to offer a more robust 'Free' tier to compensate for the lack of a low-cost monthly entry point? I'd be very curious to see the conversion data on this after a month. Good luck with the test.
Pretty Prompt
For a tool I have never used before or use very rarely, I would definitely not want the only option to be yearly. Having a monthly plan is very important for me as a user. It lets me get to know the product and build trust before committing.
If I had to design SaaS pricing today, I would go with the Screen Studio approach. Offering a heavy discount on annual makes the yearly plan feel like the obvious choice without taking away the freedom of monthly, which I think is key for first time users.
Honestly, I always get a bit hesitant when there’s no monthly option, especially with newer products. It’s not even about the price, it’s just about feeling locked in too early
But I get why founders prefer annual. better cash flow, less churn, more predictability
I think the real question is: do users trust you enough yet to commit?
Warmup Inbox
What are your usage patterns? Yearly plans are good when usage is seasonal (for example accounting software used to close the quarter).
Do you know what is your user LTV? If your yearly plan is higher than average LTV, ditching the monthly plan can be a good idea.
Pretty Prompt
@fabian_maume Great point! doing the Yearly vs monthly LTV is a good exercise probably. I'll do that now!
That’s exactly what I was thinking too. Most people usually want to test the product first before committing to a yearly plan. So instead of keeping a monthly option, adding a free trial for the yearly plan could be a better middle ground.
It keeps pricing simple while still giving users confidence before making a longer commitment.