5 Tactics That Work to Sell More Annual Plans
Annual plans are the tide that lifts all boats.
If your subscribers churn inside a year, selling more annual plan is the best way of countering this.
Below are 5 tactics that you can use to do this. Three you can ship this week, two worth A/B testing.
We did all of these tactics at Codecademy and they were extremely effective to move you plan mix in the right direction.
Going from 5% to 50% annual plans dramatically changed our business and allowed us to get to $50M ARR.
Optimizing your “plan mix” or the % of each plan you sell every week is one of the biggest opportunities that most companies miss.
Why Does This Matter So Much?
In almost all scenarios, more annual plans are a really good thing for your business.
You collect more cash up front.
You lock these users in for 12 months, which lowers churn rate, which makes your whole business more valuable.
These users psychologically commit to the product more.
Payment processing is much easier as you only need to collect 1 payment instead of 12. This lowers payment churn.
A portion of these users renew for a second year, which gives you another cash injection that is predictable.
I saw this at Codecademy and 90% of the companies that I’ve consulted with.
RevenueCat's 2026 State of Subscription Apps backed this up, showing that on average, annual users stick around 2.5x longer.
Now obviously there is selection bias in those numbers but I don’t think that’s 100% of it.
I've written about why this is so important before. Today's about the how.
The Math: Plan Selection Impacts LTV, Churn & MRR
A metric not enough companies pay attention to is their “plan mix”, which is the percent of all new purchases going to each plan.
Over time, you want more and more of your purchases going into longer-term plans. This materially impacts LTV, Churn and Revenue.
If your plan mix is slowly shifting towards shorter-term plans, that's a bad sign and will hurt your revenue.
Say you run a $40/mo product with 20% monthly churn (5-month average retention). Your annual plan is $200/year with 50% annual churn.
As LTV = Price / Churn Rate.
Monthly subscriber: $40 / 0.20 = $200 lifetime value
Annual subscriber: $200 / 0.50 = $400 lifetime value
That's 2x LTV. And you collect $200 on Day 1 instead of waiting 5 months to see if they stick.
Five Tactics to Shift the Mix
Each tactic: what to do, who does it well, rough impact, why it works. Three you can ship this week. Two worth A/B testing first.
Tactic 1 — Call out the savings in dollars on the pricing page
Just do it — no A/B test needed
Example — Beehiiv
Why it works
Concreteness bias. "Save 20%" requires mental math; "$157/year" lands immediately.
This tactic is more effective if the dollar savings amount is material for your user.
We want them to immediately grasp the impact of the decision, and converting it to dollars is more helpful.
Beehiiv prints "Save $71/year" on Scale and "Save $157/year" on Max — explicit dollar amounts next to each tier price.
Roughly the level of impact
I would call this a “small” impact, so ~5% ish more people shifting to annual plans, however it's really cheap to change.
Tactic 2 — Make annual the default throughout the purchase experience
Just do it — no A/B test needed
Example — Linear
Linear pre-enables the "Billed yearly" toggle by default. To see monthly pricing, the user has to actively turn it off.
Why it works
A certain percent of users will always accept the defaults, so set them in a way that helps you.
Linear — "Billed yearly" pre-enabled on Basic and Business tiers. Monthly is the opt-out path.
Roughly the level of impact
This is another small win, so maybe 5-7%, but is also very easy to implement.
Tactic 3 — Push monthly subscribers to upgrade inside the product
Just do it — no A/B test needed
Example — ChatGPT
ChatGPT periodically runs a persistent banner above the chat input: "Save 17% with annual billing," with a one-click "Switch to annual" CTA.
The nudge lives where engaged users already are — at the moment they're getting value. (Bonus critique: This is framed as a percentage; it might be more effective phrased in dollars.)
Why it works
Right place, right time, low friction. Find users who are already successful, who are looking to save money because they already plan on staying with your product in the long term.
Put this in the product, and also put it in an email drip series. Try not to be too annoying.
Roughly the level of impact
Small, maybe 1-5% of users click all the way through this. Keep the friction low and keep nudging them.
Tactic 4 — Put trials (or the most appealing trials) on the annual plan
A/B test this one
Example — Headspace
Headspace gives 14 days free on Annual but 7 days on Monthly. Previously, I've seen them run trials only on the annual plan.
Annual also is set to look like the obvious choice on the page.
Why it works
Most users will want the longest trial, so you might as well put them in a plan that works best for you.
Note: Longer trials can sometimes convert better, but not always.
Roughly the level of impact
This is a medium, so maybe a 10-20% lift, however this touches enough factors (trial start rate, conversion rate, plan selection, churn rates) that you should test it carefully.
I have mostly seen this work a lot, but not always. Your product might be an exception, so you should test this carefully.
I would set the north star of tests like this to be revenue per user in each side of the test. Use this calculator here to figure out what capacity you have for a test like this.
Tactic 5 — The pricing ratio trick
A/B test this one
Longtime readers will know this tactic, but this is hands down one of the most effective.
In short, figure out how long your average monthly user stays around, then price your annual plan to be 1 or 2 months longer than that.
We did this at Codecademy and it was one of the 5 best changes we ever made to drive more revenue. This is most effective for companies with shorter retention cycles (e.g., monthly users who are around for 3-6 months).
Example — Codecademy
Codecademy Plus is $14.99/mo billed annually or $29.99/mo billed monthly — a 2x per-month ratio. A year of annual = ~6 months of monthly.
Why it works
Users both jump at the savings and then psychologically commit to the product more after purchase.
Roughly the level of impact
Medium-Large. It depends a lot on your specific business, product, and retention cycles, but this can be very effective. It should be tested carefully.
So What Do You Do With This Information?
Check your current plan mix — what percentage is monthly vs annual?
Implement tactics 1-3 this week. They should be cheap to run and low risk.
Set up A/B tests for tactics 4 and 5. Probably run them sequentially.
Measure plan mix shift after 30 days.
Revisit your pricing ratio every 6 months as retention data evolves.
Annual plans won't fix a product people don't want but they can buy you precious time and cash to make improvements.
Good luck out there,
Dan
P.S - If your product does $2M ARR+ but your MRR, churn, or ARPU numbers aren’t strong enough, reach out. I help successful products scale revenue. Book a free strategy call here.
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