23 Feb SaaS Pricing Pages – Display Annual or Monthly Price First?
Should You Default To Annual Or Monthly Pricing On Your SaaS Pricing Page?
In an increasingly competitive SaaS environment with customer acquisition costs doubling over the past 5 years, every lever that impacts your conversions should be analyzed and optimized – especially your SaaS apps’ pricing page.
While there are hundreds of SaaS pricing page elements to optimize, our analysis is solely focused on answering “What contract option should you show customers first on your pricing page? Annual or monthly pricing?”
We analyzed the pricing pages of 109 different SaaS vendors.
54% displayed their annual pricing first. The other 46% defaulted to monthly pricing.
Interestingly this proportion defaulting to annual pricing plans was largely consistent across various ACV price points (see Notes).
All else equal, we would generally recommend using an annual pricing default for two reasons:
1. “Cheaper = Better Chance” – By showing your lowest price, you increase your appeal to price-sensitive buyers.
2. “Follow Wisdom of Peers” – Our dataset included a significant number of sophisticated, data-driven SaaS apps that have repeatedly A/B tested their pricing pages. Save your time and leverage their A/B testing that arrived at this result.
Having said, there are merits to displaying your monthly price first:
1. “More Honest” – A portion of your potential customers might consider displaying a lower monthly price – calculated off of an annual contractual plan – as deceptive and dishonest. Said another way, you could look more trustworthy showing your “real” monthly price.
2. “No Negative Anchoring” – The psychology of price anchoring can actually favor NOT displaying your lowest price first.
We can walk through an anchoring example of a small business owner quickly filtering through CRM options during their initial research.
At first glance, she sees Prosperworks‘ “headline” price of $19.00 per month without paying attention to the exact contract plan presented. Later in her research process, she becomes aware that the monthly plan is “actually” $24.00 per month. The price anchor just moved upward. She perceives a 26% price increase despite no “real” change in pricing. That psychological disappointment could negatively impact her perception and purchase decision.
Ultimately the right plan option to display will depend on the specifics of your product and market segment.
Further SaaS Pricing Page Reading and Resources:
We recognize this analysis was tactical and narrowly focused on answering “Should You Default To Annual Or Monthly Pricing On Your SaaS Website?”
For more strategic and comprehensive insights into optimizing your SaaS pricing page, we would recommend the following resources:
- B2B SaaS pricing pages in 2017: Lessons from 100+ top businesses via Ed Shelley at ChartMogul
- How to Design a Perfect SaaS Pricing Page via Patrick Campbell at Price Intelligently
- How’s Your Pricing Page? 387 SaaS Pricing Pages Analyzed via Benjamin Brandall at Process Street
Default Plan Shown At Different Price Points:
Consistent with a prior Process Street study where the majority of SaaS vendors did not display pricing, our data set consisted of fewer enterprise apps – who are likely to require buyers to contact sales for a price quote – and more weighted towards lower ACV SaaS apps.
Accordingly, we segmented our data into two buckets: Lower ACV (with monthly pricing below $50.00 per month) and Higher ACV (with monthly pricing above $100.00 per month).
The results were remarkably consistent with our overall analysis – both ACV buckets showed a roughly 55% annual / 45% monthly split.
This consistency reinforces our recommendation to “follow the wisdom of your peers” and leverage their A/B testing that arrived at this distribution.
Real World Pricing Page Examples:
For purposes of clarity, here are screenshot examples of each approach:
Annual Pricing Default: CakeHR (an APPEALIE 2017 SaaS Award Winner)
Monthly Pricing Default: Harvest
APPEALIE Contributors: Matt Harney, Paola Schaw, Catherine Gonzalez, Manuel Moreno