With many subscription services, the choice between an annual and a monthly subscription appears on the sign-up form, usually with a prominently marked discount for the longer term. What looks at first like a simple question of price is really more a question of commitment: an annual subscription ties you in for twelve months in advance, while a monthly one lets you leave again at the end of each month. Which option works out cheaper in the end depends less on the discount shown than on how sure you are that you will really use the service for a whole year.

Comparing them is still worthwhile, because the difference between the two models is often bigger than it first appears. If you only look at the price converted into a monthly figure, it is easy to overlook what actually happens to the money you have already paid if you cancel early.

How the discount on an annual subscription usually works

An annual subscription is normally billed as a single amount for twelve months, while a monthly subscription pays for the same service in twelve separate charges. In return for paying up front, the provider usually gives a discount compared with twelve times the monthly price, because it receives the money straight away and has fewer cancellations to handle over the year. How big that discount is, each provider decides for itself; there is no fixed rule for it.

Worked example: annual and monthly subscription side by side

Say a service costs 9.99 euros a month on a monthly subscription. Over twelve months, that comes to 119.88 euros. For the same offer on an annual subscription, the provider charges a one-off 89.99 euros. The difference is 29.89 euros, just under 25 percent compared with paying monthly over a year. If you really do use the service for the full twelve months, the annual subscription is clearly cheaper in this example.

The sums look different if you stop using the service early. If, for example, you cancel after five months because your plans change, you have already paid the full 89.99 euros. Spread over the five months you actually used, that comes to almost 18 euros a month, considerably more than the monthly subscription would have cost for the same period.

How providers often present the annual price as a monthly figure

On the sign-up page, an annual subscription is rarely shown up front as a single total. More often you see a smaller number followed by "per month", which in fact only shows the annual price divided by twelve, while the full amount is still charged all at once. In our example, the annual subscription would then be advertised as "just 7.50 euros a month", even though 89.99 euros is taken from your account in one go. The figure itself is correct mathematically, but it hides the fact that this is not a monthly charge like the monthly subscription, but a single payment for the whole year in advance.

What you lose if you leave an annual subscription early

In most cases, an annual subscription cannot be refunded pro rata if you stop using the service partway through. A cancellation then usually only takes effect at the end of the term you have already paid for, not immediately, and as a rule there is no money back for the remaining months, unless the provider's own terms say otherwise. With a monthly subscription, by contrast, a cancellation only affects the next billing period, and nothing you have already paid for is lost.

When a monthly subscription is the better deal despite the higher price

• You are still unsure whether you will really use the service regularly over a longer period.
• You are planning a change, such as a move or a quieter phase, that will interrupt your use in the coming months.
• You are currently testing several similar services side by side and do not want to commit yet.

In all these cases, the flexibility of a monthly subscription often outweighs the higher price per month, because you can always cancel at the end of the month without losing money.

Trial periods and discount codes when choosing between the two

Many providers tempt you with a free or heavily discounted trial period, which at first runs regardless of whether you then switch to a monthly or an annual subscription. A discount code for signing up often only applies to the first charge, not permanently, which brings the later comparison between the two models back to the regular price. How introductory rates usually continue after the first phase is explained in the article Subscription prices: introductory rates and their pitfalls. How daily-coupons.info works in general is also summed up on the page How it works.

What to check before switching from monthly to annual

Before you switch from a running monthly subscription to an annual one, it is worth looking at how regularly you have actually used the service over the past few months, rather than being guided by the discount shown alone. If pausing rather than cancelling is an option for times when you need the service less, it is also worth reading the article Pausing a subscription instead of cancelling. An overview of how to keep track of several running contracts so that no renewal goes unnoticed is given in the article Keeping track of subscriptions: cancel in time instead of forgetting.

Frequently asked questions

Is an annual subscription always cheaper than a monthly one?

Only if you really use the service for the full term. If you cancel earlier or only need the service now and then, the monthly subscription can end up cheaper despite its higher price per month.

Do I get money back if I cancel an annual subscription?

In most cases not on a pro rata basis. A cancellation usually only takes effect at the end of the term you have already paid for, unless the provider's terms say otherwise.

Can I switch from a monthly to an annual subscription at any time?

With most services that is possible, usually through the account settings. The switch then normally applies from the next billing date, not retroactively for months you have already paid for.

Is there a right of withdrawal for an annual subscription taken out online?

Within the EU, contracts concluded online generally come with a 14-day right of withdrawal; outside the EU, for example in the UK, the US or Canada, other rules apply. How it works in practice and which exceptions exist is explained in the article The right of withdrawal for online purchases: 14 days, when it starts and exceptions.