Also, but not only. Yearly subscriptions in itself guarantee that the user commits to 12 months and can't cancel during those 12 months

> can't cancel

That's how you get angry posts on social media. See: Adobe.

I suspect that has a lot to do with billing monthly for an annual plan. That leaves people deciding whether to continue paying for a service that they are not using or paying out a penalty in excess of the monthly rate to terminate the service. Both options leave the impression that the company is trying to punish the customer. Contrast that to paying for a year upfront, where the customer is more likely feel foolish for paying for something they did not need.

I think the angriness was from Adobe refusing to cancel now effective at the end of the contracted year - i.e. making a simple "does not renew" note - more than 30 days before end of contract, or somesuch. Therefore catching forgetful customers paying for a second unwanted year. "Understandable", as they say.

I think GP means "cancelling doesn't get you a pro rata refund" (which you wouldn't expect if billed annually) rather than you literally can't cancel :)

if it's not upfront, they can always stop paying. you don't want to sue your users for breach of contract over a $5/month subscription.

It's predictable revenue. I've committed for a year but paid monthly before. You generally get more of a discount if you pay up front, though.

Yearly contracts paid monthly give a great income predictability already which mitigates risk. Also customer retention / CLV might be better, because users pay until the end of the 12 months despite stopping using the product earlier.

There's more risk there, though, no? A customer could cancel before the end of the year and simply stop making the remainder of the payments. Sure, there's recourse, both through the credit card companies and courts, but that takes time and effort and possibly lawyers (aka money).

If you require annual customers to pay the entire year up front, you get the money, and that's that, barring credit card chargebacks.

and they're a pita for business users -- they have to deal with either reimbursing or at least tagging 12x the charges on their personal or business card.