Everyone in subscriptions has an opinion on annual plans. They’re better for LTV, better for cash flow, better for churn…
The data says so, apps love them, and honestly, the data isn’t wrong. Annual subscriptions across all categories perform better in terms of retention according to the State of Subscription Apps (SOSA) 2026 report:
But I think we’ve overcorrected.
Annual subscriptions definitely have their advantages, but I think we are a bit mean to monthly subscriptions. I’m here to stand up for monthly subscriptions, give you the good and bad just like I’ve done for annual subscriptions, weekly subscriptions, and lifetime subscriptions (sorry, monthly subscriptions, I didn’t mean to leave you until last).
It’s not that monthly plans are always better; it’s that there are specific situations where a monthly subscription will serve your app better than an annual one. And most founders never stop to ask which situation they’re actually in.
First, retention and popularity don’t equal revenue
Yes, annual plans retain better. Look at one-year retention across categories, and they win almost everywhere. Nobody is disputing that. In most categories, annual plans are the most popular option. According to SOSA 2026:
Except in the productivity and gaming categories. But retention isn’t the same as revenue.
In most categories, monthly subscriptions generate revenue equal to or exceeding their share of subscriptions. Check out the revenue for monthly subscriptions in productivity:
The productivity category is the clearest example: 76.7% of subscriptions are monthly, but 90.7% of revenue comes from those monthly plans.
That gap exists because monthly subscribers typically pay more on a monthly basis, and while they do churn at higher rates, they’re also more likely to reactivate later on.
Your ARPPU (Average Revenue Per Paying User) over time can actually be higher than you’d expect.
The reason the industry obsesses over annuals is that they create a reliable, predictable number on your dashboard. And that number feels good. But it’s worth asking: is that number telling you the truth?
The uncomfortable truth about annual subscriptions
Here’s something nobody says out loud: annual subscriptions can mask a broken product.
Someone who paid up front might not be using your app. They might regret the purchase. They might be planning to cancel at renewal. They may have stopped opening your app entirely, but your dashboard still shows “active subscriber” for another 9 months.
That’s not retention. That’s delayed churn.
And for early-stage apps, delayed churn is dangerous. It means you’re getting false signals about product-market fit. Your retention metrics look healthy. Your team feels good. And then renewal month arrives, and you discover the cliff you didn’t know was coming.
Monthly subscribers who stay are actively choosing you, every single month. That signal is worth more than an annual commitment made once, under the influence of a good discount and some well-timed push notifications.
So when should you actually offer monthlies?
There are five situations where monthly subscriptions can be your secret weapon.
1. When you are still learning
When someone commits to a quarter or a year, you don’t really know if they’re genuinely happy until renewal time. And if they’re not, you often won’t find out why until months later, by which point their memory has faded, and their feedback turns vague. You end up with things like “I stopped using it as much” or “I just found a better alternative for me.”
With monthly subscriptions, each renewal is an active decision, so users who stay are actively choosing you. Monthly subscriptions create faster feedback loops:
- You see churn patterns in weeks, not months
- When someone leaves, you can ask why while the experience is still fresh
- Users who stay are actively choosing you, giving you a cleaner signal on what’s working
Yes, monthly churn tends to be higher, but that’s the point. You’re trading a vanity metric for something more valuable: speed of learning.
Why not just look at usage patterns? Identify who is or could be at risk? For startups, this can be challenging:
- A data infrastructure takes time and money to set up
- You aren’t always sure what the best predictors of retention are
- You don’t always know yet what normal usage patterns are to identify a drop in usage
Meanwhile, monthly subscribers who stay are genuinely choosing you, repeatedly. That signal is worth more than an annual commitment made once under the influence of a good discount and some great marketing. Think about what you can learn from monthly subscribers:
- Who’s churning? Is it a specific customer segment? A specific acquisition channel?
- When are they churning? Month 1 (onboarding issue), month 2-3 (habit formation), or later (ongoing value).
- What do they say when they leave? You can ask while it’s fresh.
Start with offering monthlies if you are still learning whether you have strong retention and what drives it. It’ll help you learn what drives product-market fit far faster and has an extra benefit for startups where trust is low.
For some brands, offering only monthly (or making it the default) for the first 6-12 months could dramatically accelerate the rate at which you learn what’s working.
2. When trust is low
For startups, you don’t have a huge number of reviews or well-known individuals shouting “use this app” to the world (well, most don’t). So monthly subscriptions can be an easier first step than annual plans as you build trust, refine onboarding, and get sharper at communicating value.
In that context, asking someone to commit to a year upfront is a big ask. Monthly plans lower the barrier significantly.
Even with a free trial, I consistently see users default to monthly first — particularly in categories where “will I actually use this?” is a real question, like productivity, health and fitness, and education. They try it, and if it sticks, they upgrade to an annual later.
This is also worth thinking about for web-to-app flows.
When a user hasn’t seen your app yet — they’ve come through a web landing page, they don’t know the product — the commitment ask is even higher. App stores provide a layer of trust: standardized billing, the familiarity of Apple or Google Pay, and that quick double-click checkout. On the web, that safety net is thinner. In that context, a monthly subscription becomes an easier first step.
There’s another benefit here, too: more conversions means more data. More signals to test and optimize your funnel with. Every monthly subscriber who converts is a learning opportunity that an unconverted annual prospect simply doesn’t give you.
3. When your users prefer it
Not every user wants to pay for a year upfront. For some, it’s a financial preference. For others, it’s cultural.
In MEA and Asia-Pacific, monthly plans are notably more popular than in Western markets.
The preference for pay-as-you-go and digital wallet payments makes monthly subscriptions a more natural fit. And it’s not necessarily about price sensitivity, it’s about how people prefer to manage money in those regions.
Geography isn’t the only factor that comes into play. Certain generations prefer shorter subscriptions. We saw this with weekly subscriptions. Gen Z seems to prefer them due to a higher commitment phobia (my favorite thing about this research was that it was done by Tinder… ironic for a dating app). So, certain generations may also be more comfortable with a monthly subscription than with an annual one. It seems Gen Z and younger millennials (under 34) value shorter subscriptions with greater flexibility, while older generations tend to prefer annual subscriptions for stability and discounts.
If your audience skews younger or you’re building for emerging markets, defaulting to annual may actually be suppressing your conversion rate.
4. When your use case suits it
We all love the idea of users using our apps forever and forever, but sometimes it isn’t needed.
Take therapy, when I used BetterHelp, a therapy platform, I never for a second considered an annual subscription. Costs aside, I hoped I wouldn’t need it for a full year, and that proved true. After 3-4 months, I stopped using the platform, happily churning.
Another great example is Hinge, the dating app, which literally advertises that they are designed for short-term usage:
You need to think about your users’ expected use case, and whilst you can extend it or grow with them, for some users, you might just be a short-term fix, and that is okay.
Some apps are genuinely short-term solutions:
- Language learning before a trip.
- A fitness app to prep for a specific event
- A productivity tool for a project that has an end date
Trying to lock those users into annual subscriptions doesn’t increase their lifetime value; it increases their likelihood of feeling trapped and leaving a negative review.
Think honestly about your users’ expected use case. If your core value proposition is a transformation that happens over three to six months, a monthly (or quarterly) subscription might actually serve both parties better than an annual one.
Simpler is usually better. Look at your average retention and choose two subscription durations that match your actual use case, rather than offering every option at once.
5. When you want to drive revenue up, not just retain users
This one surprises people. Usually, for most apps, even unbounded ARPPU is lower for monthly subscriptions.
Yet, Spotify doesn’t offer annual subscriptions. Netflix doesn’t either. These are two of the most successful subscription businesses on the planet, and they’ve built their entire model on monthly billing.
Part of that is product complexity — layering monthly/annual on top of individual/duo/family plans creates more confusion than value. But I think there’s something more interesting going on.
Monthly-only pricing works when you have two things simultaneously: high early churn and very stable long-term retention. The users who stay past a certain point become genuinely sticky — content keeps updating, the habit is formed, and the switching cost is real. For those users, not having an annual discount option means they pay full price every month, indefinitely. Your LTV on retained users actually goes up.
But Peloton is an interesting case study for this. When I canceled my Peloton subscription, I was frustrated by the lack of an annual option — the monthly price felt hard to justify. But Peloton didn’t need to win that battle, because the hardware investment locks users in and makes them willing to pay a premium monthly rate anyway.
The lesson isn’t “don’t offer annuals.” It’s about understanding what actually creates stickiness in your product before you default to discounting your way to retention.
Some of these apps may initially offer an annual subscription option and then, over time, slowly shift back to monthly once they’ve maximized revenue and retention.
How do you decide what to offer?
Most apps I work with default to annual as the primary option without ever asking: Does this actually match where we are right now?
Here’s the diagnostic I’d suggest:
Offer monthly as your primary option (or only option) if:
- You’re pre-PMF or still learning what drives retention
- Your brand is new, and trust is still being built
- Your primary market is MEA, APAC, or your audience skews under 34
- Your use case has a natural endpoint within 3–6 months
- Your conversion rate is low, and you need more data to optimize the funnel
Lead with annual, but keep monthly available if:
- You have strong evidence of what drives long-term retention
- Your product creates a genuine long-term habit
- Your audience is used to SaaS-style annual commitments (productivity, B2B-adjacent tools)
- You’re confident in your onboarding and activation — users who start are getting to value
Consider exclusively monthly if:
- You have exceptionally stable long-term retention and don’t want to discount it away
- Your product model naturally supports it (premium content, ongoing service)
- You’re deliberately running a lean paywall to maximize learning before scaling
If you’re currently offering only annual, how can you actually test this?
So you’ve read all of this, and you’re thinking: fine, maybe I should give monthly a shot. You kind of have a point, Daphne.
But how do you do it without tanking your metrics?
A few things to consider before you start:
1. Define what success looks like before you start
If you test monthly and see higher conversion but lower ARPPU in the short-term, is that a win or a loss? The answer depends on where you are.
For an early-stage app still learning retention, more converted users and faster feedback loops might be worth more than a higher per-subscriber ARPPU number right now.
Know what you’re optimizing for before you interpret the results.
2. Don’t just add monthly and hope for the best
The most common mistake is simply bolting a monthly option onto a paywall that was clearly designed for an annual plan. Where you place each option and how you promote it should depend on your goal.
If you’re trying to learn, and your paywall currently defaults to annual with a prominent “save X%” badge, then adding a small, secondary monthly option at the bottom won’t tell you much at all.
If, instead, you’re trying to meet users where they are — or reduce friction in low-trust environments — then monthly needs to be more visible and genuinely considered. You can still position annual as the better value on a per-month basis, but monthly has to get a fair test if you want meaningful insights from it.
3. Think carefully about trial interaction
A free trial plus a monthly plan is a very different psychological ask from a free trial plus an annual plan. It reduces perceived risk even further, but it can also lead to lower-quality subscribers.
For that reason, some teams deliberately choose not to include a free trial on the monthly tier.
If your trial-to-paid conversion is lower than you’d like, testing a monthly entry point is one of the cleanest ways to diagnose whether the issue is price sensitivity or commitment aversion. In some cases, you might even start by offering a trial on the monthly plan first, and then remove it later once you understand how users behave.
4. Consider the monthly-to-annual upgrade path
One of the strongest arguments for offering a monthly plan isn’t the plan itself — it’s what happens after. Users who start on a monthly plan, experience real value, and then upgrade to annual are often your highest-quality subscribers. They’ve effectively chosen you twice.
If you can design a well-timed upgrade nudge — whether that’s in-app, after a key activation moment, or around the one-month mark — monthly stops being a “discounted alternative” and becomes a lower-friction entry point that feeds into annual revenue over time.
You also want to keep in mind that reactivation data, getting monthlies to reactivate, works better when you have the lifecycle marketing in place to support it.
Give monthly subscriptions a consideration, please
Annual subscriptions feel like a win: higher LTV, stronger retention curves, cash upfront. It’s easy to see why teams default to them.
But too many apps push annual plans before they’ve actually earned the right to ask for that level of commitment — before they really understand whether retention is durable, and before they’ve built enough trust for a 12-month ask to feel safe rather than risky.
Monthly subscriptions aren’t just a concession to users who won’t commit. In the right context, they’re a more deliberate product decision: one that gives you cleaner data, lower conversion friction, and faster feedback loops that help you build something people genuinely want to keep paying for, month after month.
Give them a chance – not as a fallback, but as a deliberate choice.