Annual billing often saves 15-30%, but it's not always the right choice. Here's how to decide.
The Annual Discount
Most subscriptions offer discounts for annual payment:
- Netflix: Monthly $15.49 vs Annual $155.88 (No discount offered)
- Spotify: $10.99/month vs $109.99/year (17% savings)
- Software tools: Often 20-40% annual discount
When to Pay Annually
- You've used the service for 6+ months
- The discount is 20% or more
- It's a core tool you use daily
- The company is stable and trusted
When to Stay Monthly
- You're trying a new service
- The discount is less than 15%
- You might switch to a competitor
- It's a niche tool with alternatives
Quick Calculator
Monthly cost × 12 = Annual equivalent
Compare to annual price
Difference = Your savings
Example: $10/month × 12 = $120
Annual price: $99
Savings: $21 (17.5%)
The Hidden Cost of Annual
Don't forget: annual billing locks in your cash. That $120 upfront could earn interest elsewhere. Only commit if you're certain about the service.