Monthly vs yearly subscriptions: which is cheaper?

A yearly plan only saves money if you keep using the tool long enough. Two quick sums show how much it saves and how many months it needs to pay off. The rest depends on how sure you are, your cash flow and the refund terms.

Last updated October 14, 2026

How do I compare a monthly and a yearly price?

Multiply the monthly price by 12 and compare it with the yearly price. The difference is what paying yearly saves. To turn it into a percentage, divide the saving by the 12-month cost.

Say a tool costs $12 a month or $120 a year:

12 monthly payments: $12 × 12 = $144.
Saving: $144 - $120 = $24 a year.
As a percentage: $24 ÷ $144 = 0.167, or about 17%.
Per month: $120 ÷ 12 = $10, instead of $12.

The same $24 can also be described as monthly billing costing 20% more than yearly ($24 ÷ $120). Both are correct, so check which one a pricing page means. The subscription cost calculator shows any price per month and per year, so you can enter both options and compare them.

How many months do I need to use a yearly plan for it to pay off?

Divide the yearly price by the monthly price. The answer is the number of months at which both plans cost the same. If you will use the tool for longer than that, the yearly plan is cheaper. If you might stop sooner, paying monthly is cheaper.

In the example above, $120 ÷ $12 = 10 months:

Stop after 9 months: monthly costs $108, yearly costs $120. Monthly is $12 cheaper.
Stop after 10 months: both cost $120.
Keep it all year: monthly costs $144, yearly costs $120. Yearly is $24 cheaper.

A small discount pushes the break-even close to 12 months. Say another tool costs $8 a month or $90 a year: $90 ÷ $8 = 11.25 months. After 11 months you would have paid $88 on the monthly plan, still less than $90. You would need to keep it all 12 months to save anything, and then you save $6, about 6%.

When is a yearly plan worth it?

A yearly plan is worth it when you are confident you will keep using the tool well past the break-even month. Good signs:

You have paid monthly for a few months and use it every week.
It does a job you will still have next year, not one tied to a single project.
No other tool you pay for covers the same job.
You can cover the full yearly charge without squeezing the rest of that month's budget.

Your own history is the best evidence. A tool you have used steadily for six months is a safer bet for a year than one you signed up for last week. In a subscription audit, moving a tool you keep to yearly billing counts as a downgrade: the same tool for less.

When is paying monthly the safer choice?

Pay monthly when you are not sure you will still use the tool by the break-even month. That covers:

A tool you started using recently, or one you are trying in place of another.
Work tied to a project, a course or a job that may end before the year does.
Tight months, when one large charge is harder to cover than a smaller one each month.
A service whose refund terms you can't find or don't like.

Starting monthly and switching to yearly later costs you the difference on the months you paid monthly: $2 a month in the $12 a month or $120 a year example. Some services let you make that switch. Google Play, for example, says that if the app developer allows it, you can change between billing periods such as monthly and yearly. Depending on the subscription, you may pay the full price of the new plan or only the price difference.

Can I get a refund if I cancel a yearly plan early?

It depends on the service, so check the terms before you pay for a year. Some services do not refund the unused part of a yearly plan.

Google Play is one example. Its help page says: "When you cancel a subscription, you'll still be able to use your subscription for the time you've already paid. In some instances, you may be eligible for a refund." In its example, a one-year subscription bought on January 1 and canceled on July 1 stays active until December 31 and does not renew. Google's refund policy for apps and subscriptions says: "Google doesn't give refunds for most Google Play purchases." For App Store purchases, Apple says some purchases "might be eligible for a refund" and takes requests at reportaproblem.apple.com.

Before you pay for a year, look for:

Whether you can get a refund at all, and for how many days after paying.
Whether a refund applies to renewals or only to the first purchase.
Whether canceling ends the plan right away or at the end of the year.

It helps to know what is at stake. Say you pay $120 for the year and stop using the tool after 4 months. Four monthly payments would have cost $48, so without a refund you paid $72 more than you needed to. For popular services, the cancel guides note what happens after you cancel and link to each service's own help page.

How do I make sure I don't forget a yearly renewal?

Put the renewal date in your calendar the day you pay, with a reminder a week or two before. A yearly charge comes around only once, so it is easy to forget, and it is much bigger than a monthly one.

When the reminder comes up, check:

The renewal price. The FTC notes that an automatic renewal "might charge more than you paid the last time."
Whether you still use the tool enough to get past the break-even month again.
Whether monthly billing would suit you better for the next year.

If a free trial converts straight into a yearly plan, the first charge is the full year. The free trial reminder puts the last day to cancel on your calendar.

Subskim is a free subscription tracker and renewal calendar with no bank login. Add each plan by hand or from a screenshot, and yearly renewals show up on the calendar next to monthly ones.

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