I like the approach Jason Cohen describes in his MicroConf talk from 2013 (http://vimeo.com/74338272) -- offer the annual plan, and encourage it by baking in a discount, but give people the option of choosing monthly if they'd rather pay a bit more for the option of leaving. That, combined with a money back guarantee, seems like it could be the sweet spot for a lot of SaaS businesses.
I was planning on saying exactly this. There is no reason not to offer both plans. I suspect most people will find that people will start monthly, but if they are happy with the service and you offer the yearly in the right ways they will switch over time. (just send periodic emails saying hey here is a slight discount if you pay for a year is likely enough)
Thanks for sharing this. I think the truth lies somewhere between annual prepay and month-to-month. Most SaaS companies end up offering a mix of the two =)
