Buying a SaaS Subscription: Monthly or Annual? | Proposify
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Buying a SaaS Subscription: Should You Go Monthly or Annual?

So, you’re looking to add a new piece of software your sales team’s tech stack. Great! You bring up your chosen SaaS company’s website, click on over to the pricing page, check out the details on their monthly subscription option, and… hold up. It’d be a mistake to rule out buying an annual plan just yet.

7 min. read

Once the realm of gyms, magazines, and CDs you didn’t really want, you can now get a subscription for almost anything.

Super-strong coffee? Yup. Wine-by-the-glass? Sure, why not. Toothbrushes and toothpaste? Your pearly whites will probably need it after months of wine and coffee.

Or just brush with the white wine. Problem solved!

Dangers to your oral health aside, subscriptions like these are easy, convenient, and appealing.

It’s the same for software-as-a-service (SaaS) subscriptions. Your sales team relies on their tech stack at all stages of the sales process, from your CRM and email automation, to screen sharing and custom videos, to proposals that close the deal. SaaS subscriptions give salespeople uninterrupted access to the software tools they use every day.

When you’re investing in a SaaS subscription for your sales team, your first inclination might be to go monthly. That’s the traditional subscription frequency. But, have you fully considered the benefits of an annual SaaS subscription?

Let’s take a look at some of the advantages of buying an annual SaaS subscription and how they compare to buying monthly.

Value

Sometimes, a decision comes down to price. Annual subscriptions tend to have the advantage when you’re looking for a good deal.

Many SaaS companies offer a discount on subscriptions billed annually. The discount could be structured as a percentage off the total subscription, a lower monthly rate, or a ‘free’ month or two, like ‘12 months of software for the price of 10!’

Once you have your annual rebate, that price is locked in for at least a year. This can help with budgeting. You only have to go through the internal red tape of the procurement process once per year, or once per multiple years if it’s a multi-year deal.

SaaS companies sometimes offer discounts on monthly subscriptions, but they’re not likely to be as deep. SaaS salespeople could also be more inclined to negotiate deals on annual contracts than monthly ones.

Keep in mind that the price for monthly subscribers may be subject to change. Depending on how the contract is structured, when prices go up you may or may not be grandfathered in at your original rate.

However good the deal, nobody wants to sink money into an unknown and untested solution. SaaS companies understand this inclination to try before you buy. It can be a free trial that anyone can sign up for, or a try-to-buy where the trial period is paid but can be cancelled before the full contract kicks in.

Usually, a try-to-buy situation is only offered to those considering an annual or multi-year subscription. This helps annual subscribers get a true feel for the software. Prospective monthly subscribers would get the regular free trial, which is more likely to be time-limited and may not include the full range of features or integrations.

Can’t just collect these bad boys anymore.

Time

With an annual SaaS subscription, you won’t have to throw your sales reps into the software deep end and hope they learn how to swim quickly. You can take the time to get everyone properly trained and improve sales productivity.

Software changes can bring with them process changes. While that can be time-consuming and scary, you and your team have to give the changes a chance to be successful. A longer contract gives you the space and stability to fully explore the software and use it to its fullest extent.

If you’re paying monthly, or even quarterly, by the time your sales team has completed the initial onboarding you’ll be well into or past that first payment.

Look at this way: you and your team will need to put in time, effort, and other resources over two or three months as you learn the new software. The level of implementation and investment necessary to get full value from this solution signals that you’re sold on it long-term. So why shy away from committing to an annual contract?

Customer Support

In sales, time is money. It could cost you and your quotas if your sales reps are unable to conduct business as usual because of a bug or some other glitch they need help from the software provider to fix.

Consider what level of access to support might most benefit your team. A higher-tier annual contract usually comes with a corresponding increased level of support. The SaaS company knows you and your team will be interacting with the product a lot and will need help and support along the way.

SaaS companies often offer front-of-the-line or other augmented support channels for bigger, longer-term clients. You might get priority phone assistance or real-time chat support.

Unless the customer support reps are feline, in which case you’ll receive support whenever they feel like it.

Monthly subscribers still get access to support channels, but it might be through a lengthier process, like email support.

When considering a software subscription, check with the SaaS company about the level of support. What comes standard with your monthly subscription? What are standard support response times like? How about when you have an annual contract?

Flexibility and scalability

A while back, I worked in an office where the CRM was an obscure piece of software that the organization had bought outright many years ago. It was clunky and ancient, especially when you consider how fast the digital world moves.

The number of permitted users had been maxed out. Data storage and import/export became a pain as our database grew. The company had definitely outgrown the product but was locked into using it indefinitely.

—us as we tried to use the dang thing every day.

That ‘locked in’ feeling is one reason many people opt for monthly subscriptions over annual. The ability for your software to adapt as your team grows and succeeds is vital.

You, however, are in a golden age of SaaS.

Software and annual subscriptions aren’t static. Most SaaS solutions are built to be scalable, whether that means switching to bigger plans or packages as you grow, or adding things like virtual storage space, users, or features.

The overall size of your plan can sometimes be upgraded or downgraded as required so you’re not chained to an unchanging product even though your business needs evolve.

And, with an annual subscription, you’re more likely to start with a finely-tuned and customized plan. This could mean that you’ll go longer without needing to switch anything around because you have exactly what you need.

You may have the ability to customize your monthly subscription options, but there could be an added layer of rigamarole, like having to wait until your next monthly billing cycle to implement any changes.

Monthly subscribers tend to be able to add upgrades easily, but the process of downgrading can be more difficult. For example, you may be able to access add-on options through your online account but need to contact the company to manage any changes that would downsize your subscription.

It all comes down to fit

Like any significant investment, your decision to sign on to any kind of software subscription must be well-considered. You and your SaaS salesperson should carefully assess whether your sales team is a good fit for their software.

You likely know this, since you work in sales, but it bears repeating: beware any sales rep who tries to force a fit or shows you no downsides. Not all software is a fit for everyone and transparency on this is vital when significant time and money is at stake.

This is even more important when an annual or multi-year deal is on the table. If there isn’t a solid fit, you won’t use the software and will feel like you’ve wasted resources. You’ll have to find a new solution and start down the implementation path all over again.

You can avoid embarking on this unfortunate journey by finding a SaaS software solution AND a subscription frequency that works best for your sales team.

Taking the midnight train going straight to success.

Conclusion

As you evaluate your options, don’t rule out annual subscriptions. Your assumptions about longer SaaS commitments might not be the reality. Keep in mind that annual contracts aren’t always inflexible and monthly contracts don’t always give you all the freedom you might want.

Ultimately, the decision between annual and monthly software subscriptions is yours, based on what’s best for your sales team.

And, hey, while you’re thinking about useful subscriptions your sales team can’t live without, they might be interested in that coffee subscription, too.

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