The community owners earning more are charging less. This is how.

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Annual billing gets ignored by half the community owners I speak to. The other half assumes it's a no-brainer.

So, check this out. When you offer annual billing, you're asking a member to pay upfront for 12 months instead of month-by-month. In return, you give them a small discount, usually around 2 months free, which works out to roughly 17% off.

The obvious fear is: won't I earn less?

Sometimes. But here's the thing nobody explains clearly.

Every month, you have a monthly member who faces a decision point. Cancel or stay. Do that 12 times a year and the odds of them hitting cancel at least once, during a busy week, a slow month, a moment of doubt, go up considerably. Annual billing removes 11 of those 12 decision points.

So yes, you might give up 17% of the revenue. But you're also dramatically reducing the chance they leave before the year is out.

Research across membership businesses puts the effective churn rate for annual members at roughly half that of monthly members. The cash flow argument matters too; having members pay annually upfront is a very different experience from hoping they all renew next month.

That said, it's not automatic money.

The discount has to feel worth it. If you offer 10% off and call it a deal, most people won't bite. The 2-months-free framing converts significantly better than a percentage discount.

There's also a risk worth being honest about. Some members who would happily have paid monthly for 18 months will switch to annual and save money you didn't need to give away. The numbers suggest it's outweighed by the retention benefit in most cases, but it depends on your current churn.

Here's a quick sense check on the numbers.

If you have 20 members at $49/month and 4 of them take an annual offer at 2 months free, you collect $1,960 upfront. If all 4 stayed the full 12 months on a monthly you'd collect $2,352, so you're giving up $392 in the best case scenario. But if even one of those 4 cancels before month 10, annual already wins. That's the bet you're making.

Run that against your own numbers. How many of your current members do you think would take it?

This is one of the things we talk about regularly inside Skool Monetisation Lab. If you're building a community and want to think clearly about the revenue side, come and join us.

Join here - https://www.skool.com/skool-growth-lab-2540/about

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