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Annual vs monthly billing calculator
Enter the number of seats and the price per seat per month on each billing option. You get the yearly cost of both and the months you need to stay for annual billing to win.
Annual billing pays off when you use the product long enough to cover the up-front payment. At the default numbers yearly billing saves USD 2,880 a year, an effective discount of 20%.
Written by Procurement VMS Editorial Team · Reviewed by Michael, Procurement Advisor Expert · Updated
Your numbers
The boxes start with an example so you can see how it works. Replace them with your own figures.
Your result
Billing annually saves USD 2,880 a year, an effective discount of 20%. You need to keep the subscription for about 9.6 months for the up-front payment to beat paying monthly.
| Yearly cost billed monthly | USD 14,400 |
|---|---|
| Yearly cost billed annually | USD 11,520 |
| Yearly saving from annual billing | USD 2,880 |
| Effective discount | 20% |
| Months you must stay for annual to win | 9.6 months |
The currency box changes the label only. Enter amounts in the currency you choose.
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Save this result as a PDF guide and an Excel model
Free to download. You enter your name, work email and phone number, and the files are ready at once.
- PDF guide with the formula, a worked example and a checklist of what to enter
- Excel model with live formulas, so your own numbers recalculate at once
- Ready at once after the form, with no account to create
The files open with the example numbers from the page. Type yours over the blue cells in the Excel file. The calculator on this page is free to use without a form.
How the annual vs monthly billing calculator works
The formula
Yearly saving = seats x (monthly price - annual price) x 12. Break-even months = 12 x annual price / monthly price.
Most subscription vendors price annual plans well below monthly ones, and the gap is the reward for the commitment. It is worth taking when you are sure you will use the tool for the year.
The risk is paying for a year and leaving after four months. The break-even figure tells you how long you must stay for the annual option to win, so you can compare it with how sure you are about the tool.
The example numbers are illustrative and are not benchmarks. Use your own data for any decision.
How to use it with your own data
- Read both prices from the pricing page. Many pages show the annual price as a monthly equivalent.
- Enter seats and both prices.
- Compare the break-even months with how long you expect to keep the tool.
Mistakes that skew the answer
Comparing yearly price with the monthly figure
Convert both to the same period. The monthly equivalent of an annual plan is the annual total divided by 12.
Ignoring refund terms
Annual plans are often non-refundable. Check what happens if you cancel early.
Forgetting seat changes
Annual plans may fix seats for the year, while monthly plans let you scale.
What to do with the result
Check the specific saving for your tool in the pricing guide library, which shows the annual and monthly rate for every plan. Then use the SaaS license waste calculator before you commit to a full year of seats.
Questions about the annual vs monthly billing calculator
Is annual billing cheaper than monthly?
Almost always for software subscriptions. The discount is typically stated on the pricing page, and ranges widely by vendor.
When is monthly billing better?
When you are not sure you will keep the tool, when seat counts change often or when cash flow matters more than the saving.
Can I switch from monthly to annual later?
Usually yes, at any point. Some vendors prorate the change.
What is the effective discount?
It is the share of the monthly price you save by paying annually.