How SaaS businesses structure their subscriptions can have a significant impact on subscriber acquisition and retention, as well as increase revenue.
To provide benchmark data on the effectiveness of different options, Recurly Research studied how subscription plans are structured in the SaaS industry. This study included data from over 1,000 SaaS businesses and was conducted over a nineteen-month period.
These comparative benchmarks will help you make decisions on how to structure subscription plans to maximize revenue and spur adoption.
The majority of SaaS businesses offer both monthly and annual plans, whether they serve a B2B or B2C audience. However, 27% of all companies in the survey offer only monthly plans. Providing a choice of plan options may spur increased conversion and retention.
We categorized each SaaS business into one of eight segments. The “Miscellaneous” category includes all businesses where the segment could not be determined.
To encourage adoption, many SaaS businesses offer a discount in return for an annual commitment. In addition, free trial subscriptions are a popular tool which spurs conversions by letting prospects sample the service before committing to purchasing a subscription.
The most popular percentage discount is 16.7% which may appear to be unusual. However, it maps to a 'two month free' offer on an annual plan. Similarly, an 8.3% discount reflects a 'one month free' offer for an annual plan.
Our research showed consistent results across all price points. However, the research revealed exceptions at both the lowest and highest price segments.
The lowest-priced plans (less than $10) offered the greatest percentage discount on annual plans. Lower-priced plans tend to have higher churn, so promoting retention by offering a larger discount for an annual commitment is a common strategy.
Conversely, higher-priced plans offered the lowest percentage discount. Many businesses in this price segment may provide enterprise software in which features, functionality, and suitability are more important criteria than price.
A wide range of price points within each segment results in large variances in median discount percentage.
While the median trial conversion rates were similar for monthly vs. annual plans, monthly plans had slightly higher conversion rates. Annual plans had a larger spread between the first and third quartiles.
For annual plans, the median trial conversion rate decreased as the prices increased.
The structure of subscription plans and whether you offer discounts or free trials are critical decisions impacting the success of your business. Comprehensive benchmark data can help inform strategic decision-making. When critical decisions are guided by data, adoption and revenue can increase significantly.
We examined a sample of over 1,000 SaaS sites which used the Recurly platform. The study encompassed a period of nineteen months, from January 2017 to July 2018. All data was aggregated and anonymized. Our study uses median, 25th, and 75th percentile values which eliminate outliers and provide a more accurate representation of the data.
For annual plan discount rate, we used this formula to determine the rate, with M equal to Monthly Price and A equal to Annual Price: (12 x M) – A / (12 x M)