# Annual Plan

> An annual plan is a subscription model where a customer commits to and pays for a full year of service upfront.

- **URL**: https://dodopayments.com/glossary/annual-plan

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## What is Annual Plan?

An annual plan is a subscription model where a customer commits to and pays for a full year of service upfront. In exchange for this long-term commitment, businesses often offer a discount compared to the monthly billing rate.

### Why It Matters

- It provides the business with a large amount of upfront cash to invest in growth.

- It significantly reduces churn by locking in the customer for a twelve-month period.

- It simplifies the billing process by requiring only one invoice and payment per year.

- It aligns the customer's commitment with the time needed to see full value from the product.

## Learn More

- [Subscription pricing models that scale](https://dodopayments.com/blogs/subscription-pricing-models)
- [Set up subscription billing in an afternoon](https://dodopayments.com/blogs/set-up-subscription-billing-afternoon)
- [Alternatives to traditional recurring billing](https://dodopayments.com/blogs/recurring-billing-alternatives)