Saas company pricing: display annual or monthly price?
Posted: Tue Dec 24, 2024 8:58 am
In an increasingly competitive SaaS environment, especially with customer acquisition costs doubling in the last five years, every lever that affects your conversions must be analyzed and optimized, especially the pricing page of your website.
Read: Paid advertising in SaaS companies: 8 absurd mistakes that compromise ROI
While there are hundreds of elements on a pricing page to student database optimize, our analysis is focused solely on answering “Which plan option should you show customers on your pricing page? Annual or monthly pricing?” .
Appealie analyzed the pricing pages of 109 different SaaS companies.
Result:
54% display their annual prices first. The other 46% prefer to display the monthly price.
saas-company-prices
Interestingly, the survey also showed that the proportion not viewing plans with annual pricing was broadly consistent across price points .
ANNUAL PRICE VERSUS MONTHLY PRICE
To come to a conclusion about the best way to capture customers with your pricing page, you need to consider both approaches.
SHOW ANNUAL PLAN FIRST:
I generally recommend using an annual pricing pattern when you want to reach customers with these two goals:
“Cheaper = Better Chance” – By showing your lower price (a consequence of an annual plan), you increase your company’s appeal to price-sensitive buyers.
“ Follow the Majority ” – Many established SaaS companies with a lot of authority prefer to display annual prices. You can save time by following the majority of these companies, taking advantage of the tests they have already done.
Also read: How to Use Google Analytics Data to Boost Your Marketing Strategy
How to AB Test your website spending R$0: Case study with a 130.96% increase in conversion rate
SHOW MONTHLY PLAN FIRST:
Displaying monthly plans on your SaaS company’s pricing page also has its advantages. These are:
“More honest” – Some of your potential customers may find displaying an annual contract plan misleading and dishonest. Alternatively, you can appear more trustworthy by displaying your “real” monthly price.
“No Negative Anchoring” – The psychology of price anchoring can actually favor NOT displaying your lowest price first.
Want an example?
Let’s imagine a small business owner who quickly filters through CRM options during an initial search.
At first glance, she sees the price on a SaaS company's page that advertises R$19.00 per month, without paying attention to the exact contract plan.
Later, while still researching, she realizes that the monthly plan is “actually” R$24.00. However, the price has just gone up. She sees a 26% price increase, despite no “real” change. This psychological disappointment could negatively affect her perception and purchasing decision.
Either way, the correct plan option to display will depend on the specifics of your product and market segment.
Real Examples of Price Display Pages
For clarity, here are sample screenshots of each approach with companies participating in Appealie's survey:
Annual Price Display: Cake HR (2017 APPEALIE Award Winner).
saas-company-prices-1
Example of Monthly Plans display: Harvest:
Read also: How do I discover my archetype?
saas-company-prices-2
Do you want to know the best pricing display strategy for your company? Do you want to attract more customers and increase your business revenue?
Read: Paid advertising in SaaS companies: 8 absurd mistakes that compromise ROI
While there are hundreds of elements on a pricing page to student database optimize, our analysis is focused solely on answering “Which plan option should you show customers on your pricing page? Annual or monthly pricing?” .
Appealie analyzed the pricing pages of 109 different SaaS companies.
Result:
54% display their annual prices first. The other 46% prefer to display the monthly price.
saas-company-prices
Interestingly, the survey also showed that the proportion not viewing plans with annual pricing was broadly consistent across price points .
ANNUAL PRICE VERSUS MONTHLY PRICE
To come to a conclusion about the best way to capture customers with your pricing page, you need to consider both approaches.
SHOW ANNUAL PLAN FIRST:
I generally recommend using an annual pricing pattern when you want to reach customers with these two goals:
“Cheaper = Better Chance” – By showing your lower price (a consequence of an annual plan), you increase your company’s appeal to price-sensitive buyers.
“ Follow the Majority ” – Many established SaaS companies with a lot of authority prefer to display annual prices. You can save time by following the majority of these companies, taking advantage of the tests they have already done.
Also read: How to Use Google Analytics Data to Boost Your Marketing Strategy
How to AB Test your website spending R$0: Case study with a 130.96% increase in conversion rate
SHOW MONTHLY PLAN FIRST:
Displaying monthly plans on your SaaS company’s pricing page also has its advantages. These are:
“More honest” – Some of your potential customers may find displaying an annual contract plan misleading and dishonest. Alternatively, you can appear more trustworthy by displaying your “real” monthly price.
“No Negative Anchoring” – The psychology of price anchoring can actually favor NOT displaying your lowest price first.
Want an example?
Let’s imagine a small business owner who quickly filters through CRM options during an initial search.
At first glance, she sees the price on a SaaS company's page that advertises R$19.00 per month, without paying attention to the exact contract plan.
Later, while still researching, she realizes that the monthly plan is “actually” R$24.00. However, the price has just gone up. She sees a 26% price increase, despite no “real” change. This psychological disappointment could negatively affect her perception and purchasing decision.
Either way, the correct plan option to display will depend on the specifics of your product and market segment.
Real Examples of Price Display Pages
For clarity, here are sample screenshots of each approach with companies participating in Appealie's survey:
Annual Price Display: Cake HR (2017 APPEALIE Award Winner).
saas-company-prices-1
Example of Monthly Plans display: Harvest:
Read also: How do I discover my archetype?
saas-company-prices-2
Do you want to know the best pricing display strategy for your company? Do you want to attract more customers and increase your business revenue?