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Ecommerce glossary > Annual subscription

Annual subscription

What is an annual subscription?

In an annual subscription, a customer enters into an agreement with a business where they pay an annual recurring fee in exchange for products or services. Often, annual subscriptions fall under the access subscription model, where customers pay a recurring fee in exchange for membership or access to gated content, products, or services. Examples could include an annual plan for access to state parks, an annual subscription plan to a grocery delivery service, annual pricing for the services of a SaaS company, or a magazine subscription with an annual contract.

Annual vs monthly subscriptions & other subscription cadences

Subscription products and services can exist on any cadence. In addition to annual subscriptions, many businesses offer monthly subscription billing, weekly subscription billing, or subscriptions with a custom billing interval (for example, every third week). A subscription’s cadence all depends on the products or services it involves, as well as the preferences of the customers who purchase it. For example, a frequently-used consumable product, such as laundry detergent, may be better suited for monthly billing plans. Meanwhile, an online magazine subscription might be more suited for annual billing, which would allow annual subscribers to “set and forget” their purchase for an entire year until the next billing cycle.

What are the benefits of annual subscriptions? 

Regardless of their cadence, subscriptions offer numerous benefits for both consumers and subscription businesses. Due to their recurring nature, they allow subscribers to form relationships with brands over a longer period of time, making it possible to increase lifetime value (LTV) and customer loyalty while reducing customer churn. Subscriptions offer businesses a reliable source of recurring revenue, making processes like forecasting and inventory management easier and more accurate. For consumers, subscriptions have the potential to offer both convenience and value.