Preference is to treat it as a convenience option and not a discounting method. Have the annual option paid annually with no discount for $2,988, but debate is strong. Note that the monthly option is $249/month.
In the B2B environment, especially with medium businesses, it's common to subscribe for a long period of time. It's even more common if you solve a business critical problem (accounting, finance etc...), companies are not going to change solution overnight.
Annual payment is also a great way for SaaS vendors to generate revenue fast in order to invest massively in new acquisition. Annual payment allows you to recover your CAC and make a profit in just a few days (against months for monthly payment).
If you don't give any incentives to users to subscribe annually, then I don't see why they would. They better use the software and pay as they go. So I would advice you to create a little incentive to make your annual payment a bit more appealing to users (5% or 10% may even be enough).
I would also advice you to test those different assumptions on your real customers. Maybe they're used to paid annually without any discount.
I'd be happy to help you with the particulars on the phone or via email. Don't hesitate to contact me if you have any further questions.
Answered 10 years ago
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