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Frameworks, core principles and top case studies for SaaS pricing, learnt and refined over 28+ years of SaaS-monetization experience.
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Based on the guidance in our SaaS pricing book, Price to Scale, many companies tend to offer a discount in the range of about 18% to 20% on annual subscriptions relative to monthly subscriptions. Here are a few key points to consider:
• In our book, we discuss that offering an ~18–20% discount for annual contracts (sometimes with an incremental uplift on maintenance fees) is common practice.
• This discount structure not only incentivizes customers to commit for a longer term but also helps to stabilize your recurring revenue, a key tenet discussed in Price to Scale.
• While these numbers serve as a reliable baseline, it's important to tailor the discount to your specific customer segment and value proposition.
In summary, if you're looking to set your annual subscription pricing relative to monthly pricing, starting with a discount of roughly 18–20% is a standard approach described in Price to Scale.