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Ecommerce glossary > Yearly subscription

Yearly subscription

What is a yearly subscription?

In a yearly subscription (also referred to as an annual subscription), customers enter into a contract with a business where they are billed annually on a recurring basis in exchange for products or services. Many yearly subscription offerings fall under the access subscription model, with subscribers making annual payments in exchange for discounts and deals, new releases, gated content, free shipping, a membership, and more. For example, a fitness app with an annual recurring fee and a software as a service (SaaS) company with repeating yearly pricing are both annual subscriptions. 

Yearly vs monthly subscription plans

Subscriptions can exist on any recurring cadence—not just annually. Many businesses give customers options for monthly subscriptions, weekly subscriptions, or subscriptions on a custom interval (for example, bi-weekly). The ideal cadence for a subscription all depends on several factors, including the nature of a company’s products or services and the preferences of its customer base. For example, subscribers who prefer greater flexibility in skipping or rescheduling their deliveries may prefer to make monthly payments rather than yearly ones.

Benefits of annual subscriptions

Regardless of their cadence, subscriptions offer great value for both consumers and merchants. For businesses, subscriptions provide a reliable source of recurring revenue. By automatically charging a customer’s debit card or credit card on a recurring basis for a fixed price, businesses can eliminate the mental workload for customers of remembering to purchase certain products or services. Additionally, subscriptions often come with discounts, providing financial incentive for customers to sign up.