Joy Foroughi
Executive Assistant
App Subscription Pricing: Monthly vs. Annual Plans
Monthly and annual plans solve different problems for a subscription app. Monthly lowers the cost of getting started. Annual gives users a discount in exchange for paying upfront. If you’re building or updating a subscription app, compare first-year revenue under both plans, then decide what your paywall and billing system need to support.
Monthly and annual plans solve different problems for a subscription app. Monthly lowers the cost of getting started. Annual gives users a discount in exchange for paying upfront. If you’re building or updating a subscription app, compare first-year revenue under both plans, then decide what your paywall and billing system need to support.
You are probably choosing this while the app is still being designed or just after launch, when every pricing decision feels permanent. It isn't, but it is expensive to get wrong. Plan structure shapes your paywall design, your billing code, your renewal emails and your cash flow.
TL;DR
Monthly lowers the upfront cost for customers. Annual brings in cash upfront and can appeal to users who expect to keep using the app.
Start by testing an annual discount near 15% to 20%, often framed as two months free, and compare it with your own retention data.
RevenueCat observed higher one-year retention for annual subscribers. Use your own cohorts to assess how each plan performs.
Test plan duration and plan count before price changes. They win more often.
In the U.S., disclose renewal terms clearly and make cancellation simple. Build this into the product from day one.
What each plan does for you and your customer
Monthly and annual billing solve different problems. Stripe's overview of billing cycles lays out the trade-off well.
Monthly plans give customers a low entry price and the freedom to cancel without a long commitment. For you, that means more sign-ups, but also higher administrative cost, less predictable revenue and more churn.
Annual plans give customers a discount in exchange for commitment. For you, they bring a lump sum of cash, lower administrative cost and a customer who has committed. The costs are a higher upfront price that some buyers will refuse, and the need to recognize that revenue across the whole year.
The quick way to think about it:
Factor | Monthly | Annual |
|---|---|---|
Price shown at checkout | Low | Higher, but cheaper per month |
Conversion at first purchase | Usually easier | Needs a clear discount story |
Observed retention after 12 months | Lower in the cited benchmark | Higher in the cited benchmark |
Cash flow | Steady, slow | Upfront, lumpy |
Renewal decisions per year | 12 | 1 |
Best for | Early-stage, unproven value | Users who have already seen value |
How much should the annual plan cost?
The common rule of thumb is a discount of about 15% to 20% off twelve months of the monthly price. SubscriptionPlaybook recommends offering both plans with that discount, often marketed as "two months free," and notes that higher-churn businesses can afford larger discounts because annual customers would otherwise leave sooner.
It helps to see actual numbers. Say your monthly plan is $9.99:
Twelve months at the monthly price: $119.88.
Two months free ($9.99 × 10): $99.90, a discount of roughly 17%.
A 20% discount: about $95.90.
The market sits well beyond that rule of thumb, though. RevenueCat's State of Subscription Apps report found that median annual prices reflect a 67% discount against the median monthly price times twelve. Adapty reports that the median annual plan costs about 3x a monthly plan, so annual subscribers save around 75% per month. Many apps price annual aggressively, especially in consumer categories. Treat 15% to 20% as a starting point rather than a ceiling.
The break-even formula
Before you pick a discount, know what it costs you. VentriTools' calculator uses two simple formulas:
Annual price = monthly price × 12 × (1 − discount)
Break-even month = annual price ÷ monthly price
The break-even point compares cumulative payments. The annual subscriber pays the full price upfront. The monthly subscriber catches up once their payments total that amount. In the $99.90 example, the totals match at the 10th payment, and the monthly total first exceeds the annual price at the 11th payment. For the $95.90 plan, the monthly total first exceeds the annual price at the 10th payment.
Using the $9.99 example:
Annual price | Discount | Break-even month |
|---|---|---|
$99.90 | about 17% | 10.0 |
$95.90 | 20% | 9.6 |
Compare the annual price with the gross revenue you expect from a monthly subscriber over the first year. In the $99.90 example, a monthly subscriber who makes fewer than 10 payments generates less gross revenue than the annual price. One who makes 11 or 12 payments generates more. Model conversion, refunds, and renewals separately before deciding which plan to emphasize.
This is why the first number to find is your average monthly subscriber lifetime. One practical rule from a deep dive on annual pricing is that a good pricer should be indifferent between selling a monthly or an annual plan. That needs four inputs: average monthly price per customer, average annual price per customer, monthly retention and annual retention. Its worked example showed the break-even on a two-year view sitting at a 31% discount, well above the common 17%. That is why you should model your own retention rather than copy a competitor's price.
What retention benchmarks show
RevenueCat observed that 33.9% of annual subscribers were still active after one year, compared with 13.8% of monthly subscribers. People who expect to use an app for longer may be more likely to choose annual in the first place. The plans also have different renewal schedules, so compare cohort results alongside renewal rates and revenue per user.
Annual billing has fewer scheduled payment attempts. When comparing your own plans, track voluntary cancellations separately from churn due to failed payments. Our guide on reducing subscription churn in your mobile app covers both billing and product changes.
Why monthly plans still matter early
It would be a mistake to read the retention data and go annual-only. Monthly plans lower the buyer's risk, and that matters most before you have proven the product.
ChartMogul's 2025 billing report found that companies with at least 50% of ARR from monthly plans grow faster, especially from $0 to $10M ARR. In its data on companies under $1M ARR, the top quartile leaning on monthly grew 131% year over year while the median company leaning hard on annual grew 18%. Keep in mind that those figures come from SaaS businesses, not consumer apps, but the logic carries over: while you are still finding product-market fit, a low-commitment first purchase gets more people through the door.
The same ChartMogul data shows timing matters. Customers are 3x more likely to upgrade from monthly to annual in month two than in month nine. That suggests a sensible pattern: start people on monthly, then offer the annual upgrade early, once they have seen the value.
When to choose which
Use this as a decision guide rather than a rule.
Lead with monthly if:
You are pre-product-market fit and need sign-up volume.
Your value shows up slowly or varies by season.
Your price point is high enough that a full-year charge triggers hesitation.
Push annual harder if:
Your monthly churn is high, so a discount costs you little by comparison.
Users clearly return weekly and get lasting value.
You need upfront cash to fund development or marketing.
Consider offering both if your audience includes users with different levels of commitment. Preu AI, a study app, tested a heavily discounted annual plan alongside its monthly plan and reported an 80% increase in proceeds per user and a 22% increase in trial conversion. Use the example to inform your own test.
Also watch your adoption rate. Subscribe & Conquer's guide says 30% to 50% of new customers choosing annual is typical when the discount is presented well, and that below 20% the discount is probably too small or the commitment objection too strong. The same guide advises offering annual after 14 to 30 days of healthy engagement rather than only at checkout, and never going annual-only at first checkout in a consumer category.
What to test, and in what order
The wrong way to price is to guess once and never revisit. The right way is a short, ordered list of experiments. Adapty's paywall data shows that plan-duration tests win on lifetime value 58.7% of the time, versus 45.5% for price changes. Airbridge, drawing on Adapty's dataset of 16,000+ apps, recommends starting with plan structure and trial length before price testing.
A workable sequence:
Plan structure: monthly only, annual only, or both.
Plan count and default selection: which plan is pre-selected and how many options you show.
Trial length: where a free trial applies, test it against the plan type.
Annual discount depth: try two or three levels against your break-even number.
Price level: only after the structure is stable, and ideally on new subscribers only.
Track conversion, 30-day and 90-day retention and revenue per user for each cohort. You will need clean analytics to read the results; our comparison of Firebase Analytics and Mixpanel for retention helps you pick the tooling, and our paywall design patterns guide covers how to present the choice. If you are weighing this against other revenue models, see our app monetization strategy planning guide.
Pro Tip Set a decision threshold before the test starts. If annual adoption falls below the threshold you chose for your app, review the offer and paywall copy before changing the monthly price.
Renewal and cancellation rules for U.S. apps
Subscription requirements can vary by jurisdiction and billing channel. Identify which rules apply before designing checkout, renewal notices, and cancellation.
Federal. A federal appeals court vacated the FTC’s 2024 click-to-cancel rule in July 2025, and the FTC restored the prior rule text in 2026. For covered online subscriptions, the Restore Online Shoppers’ Confidence Act requires clear disclosure of material terms before collecting billing information, express informed consent before charging, and a simple way to stop recurring charges.
State. The California Attorney General’s guidance says businesses must give 15 to 45 days’ notice before renewal when an auto-renewing subscription has an initial term of at least one year. Check notice timing and cancellation requirements for the states where you sell.
App stores. Apple’s consent rules depend on the storefront, how recently the price increased, and the size of the increase. Its standard size-based consent trigger applies when the increase exceeds both 50% and the applicable local equivalent of about US$5 per billing period for non-annual subscriptions or US$50 per year for annual subscriptions. Google Play distinguishes between opt-in and eligible opt-out increases. When opt-in is required, the subscription is canceled before the first charge at the higher price if the subscriber does not accept.
Have counsel review the requirements that apply to your subscription. Build clear price disclosures, required notices, and an accessible cancellation path into the first release.
Pre-launch checklist for subscription billing
Paywall and onboarding. Show the full charge, billing interval, and any trial or renewal terms. Decide where users will see the annual option and when monthly subscribers can see an upgrade offer.
Billing and plan changes. Test purchases, trial conversions, renewals, failed payments, upgrades, downgrades, and restored purchases. Verify that app access matches the subscription status after each change.
Renewal and cancellation. Confirm who sends any required notices for each billing channel and test the path users take to manage or cancel their plan.
Analytics and forecasting. Track paywall views, purchases, renewals, and cancellations by plan and cohort. Model upfront cash separately from revenue recognized over time with our mobile app revenue ROI calculator guide.
Build enough flexibility to test plan duration after launch. If you’re scoping the work, use our app development cost breakdown to plan the build.
Our perspective
Founders usually ask us which plan to pick as though it were a single decision. In our experience it is a sequence. You launch with a structure that gets users in, you learn how long they actually stay, and you adjust the annual offer to match.
The mistake we see most often is treating pricing as a marketing task handled after the build. Plan structure decides how your paywall, onboarding, billing and analytics are designed. If those decisions are made late, they are made under pressure, and changes cost more.
That is why we work with senior developers and designers directly with you from kickoff. Pricing questions like discount depth, trial placement and renewal flows are product questions, and they get answered fastest when the person designing the paywall is the person you are talking to, not a junior relaying messages. Our approach is to define the MVP around the revenue model, build the flexibility to test plan duration early, and keep supporting the app after launch so that what the data tells you becomes the next release.
Our advice: offer both plans, instrument everything, and review the numbers on a schedule rather than when something breaks.
Plan your subscription app with a senior team
If you are building a subscription app and want pricing, paywall and billing designed together, that is what we do. TouchZen's team has launched over 75 apps across industries, and you work directly with senior designers and developers from strategy through launch and ongoing support.
Start with MVP development for startups if you are validating a first version, or see ongoing support and growth if your app is live and you want to test plan structure and improve retention. You can also explore the full range of services.
FAQ
Should a new app offer monthly, annual or both?
Offering both is a reasonable starting point. Monthly keeps the first purchase low-risk, while annual gives committed users a discount and brings in cash upfront. If you must start with one, monthly can lower the barrier for an unproven product.
How big should the annual discount be?
A common starting point is 15% to 20%, often presented as two months free. Higher-churn apps can afford more, because annual customers would otherwise leave sooner. Calculate your break-even month from your own retention, then test two or three discount levels.
How do I calculate break-even between monthly and annual?
Divide the annual price by the monthly price to find how many monthly payments equal the annual price. At $9.99 monthly and $99.90 annually, the totals match at the 10th payment. If the result is fractional, the monthly total first exceeds the annual price at the next whole payment.
When should I show the annual plan to users?
Often the best time is after onboarding, once users have had 14 to 30 days of healthy engagement, not only at checkout. Data from ChartMogul also shows upgrades to annual are much more likely in month two than month nine. Test the timing on your own paywall.
bWhat U.S. rules apply to auto-renewing app plans?
For covered online subscriptions, the Restore Online Shoppers’ Confidence Act requires clear disclosure of material terms, informed consent before charging, and a simple way to stop recurring charges. State laws and app store policies can add requirements. Review the rules that apply to your customers and billing channels with counsel.
Sources
Annual vs Monthly Subscription: The Right Annual Discount (SubscriptionPlaybook)
Annual subscriptions for apps: The pros and cons (RevenueCat)
What does a high-performing paywall look like in 2026? (Adapty)
