Dear SaaStr: What is the average percentage of annual vs. monthly plan sold for a BtoB SaaS startup targeting the SMB market?

Here are some rough-and-tough numbers:

  • If the customers are so small they are basically paying out of their own pockets … then 80%+- will pay monthly.  20%+- will pay annually to save moneyMost would rather skip the discount and pay less now.
  • Once the customers get large enough, and you have a brand … in the enterprise, for six figure deals … almost all will want to pay annually via invoice.  Anything else is way too much trouble to get through procurement, accounting, etc.  And while it’s your budget — it’s not your money.
  • The earlier stage you are, the more flexible you probably should be.  Folks at scale can force their customers down an annual path even if they don’t want to.  That’s fairly common, and most SaaS companies that offer both seem to toggle Annual on as the default choice now.

The more you are between these two ends of the spectrum, your ratio will likely be in-between.

A few data points:

A related post here:

Annual Contracts: Maybe Not All They Are Cracked Up To Be


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