Month-to-Month vs. Annual Contracts in B2B SaaS | by Danan Margason | Medium

Running a legal team allows me a unique perspective that nobody else in a company gets: the opportunity to see every single agreement that we sign. Because of this, I have negotiated and seen a lot of deals, with companies of all sizes and all levels of complexity. One of the most common debates is whether to offer month-to-month agreements or annual commits. Annual commits are great because you get predictable, mostly guaranteed revenue. Investors and CFOs love this. M2M agreements are also great, though, because they are (theoretically) easier to close and reduce friction with prospects by commanding a lower overall price commitment. Having seen a lot of both types of deals, I want to dispel some of the common arguments against annual commits and make the case for pushing them harder. Myth #1: Clients don’t like committing to new products for a whole year. While this is sometimes true, you also need to realize that most B2B SaaS products represent a big technology commitment from the

Running a legal team allows me a unique perspective that nobody else in a company gets: the opportunity to see every single agreement that we sign. Because of this, I have negotiated and seen a lot of deals, with companies of all sizes and all levels of complexity. One of the most common debates is whether to offer month-to-month agreements or annual commits. Annual commits are great because you get predictable, mostly guaranteed revenue. Investors and CFOs love this. M2M agreements are also great, though, because they are (theoretically) easier to close and reduce friction with prospects by c