Do you bill your customers per month or per year? I see a lot of hosting companies who charge ONLY on an annual basis. This way their customers are somehow constrained in this one-year "lock-in" period. Is this a good strategy against billing your customers on a per month basis?

We were kind of forced into offering both monthly and yearly plans. Yearly plans obviously makes things easier for everyone concerned, less chance of forgetting to renew the account, less billing issues, etc. However I can understand some peoples reluctance due to bad experiences. So I guess what I would like to see anyway would be for a client to signup for a monthly plan if that's what they prefer, and if after a month or so if their happy with their host, sign up for a yearly plan. Usualyy it's cheaper too. If there're not happy with the host, then move on and try another.

I actually prefer monthly billing.
It's really no more accounting for us because our software takes care of everything.
I prefer to have a consistant monthly income rather than lump sum amounts.

We offer monthly, quarterly, semi-annual and annual billing. We have about a 50-50 split between annual and monthly subscribers.

And yet another opinion chimes in:

Unless you think of a very obvious advantage in having or not having multiple payment periods (such as having only semiannual or annual on your least-expensive plan, to try and weed out the scammers), you might want to think about offering monthly, quarterly, semi-annual, and annual - or at least the first three. It gives the customers the choice, which is always good - especially if the customer sees 'Oh, look, I can get a slight discount/have fewer things to remember if I pay once a year, but I can choose to start out with monthly payments.' or 'I prefer monthly payments, but I know that the next quarter's going to be lean so I want to consolidate payments where I can until I get through this rough patch/busy spot.'

75% of customers will not change their payment cycle once they've chosen one. But almost all of them will appreciate having that choice available to them. It's almost as much a psychological as a financial question.

I haven't seen too many hosts offering multi-year payments; but I suppose you could offer that to longer-term clients who ask. Just keep in mind that your income will be a bit more spastic. From your side of things, you'll want to try and have a fairly equal income-curve from month to month. It's a moving target, but there are definite advantages to knowing that you'll always have at least X amount of income each month.

From a customer's stand point ....

When I have signed with a new web host, for the first year I would ONLY want to pay "month to month". Especially if the web host is new.

After the first year ... if there is a significant savings if I pay by the year ... then I will likely switch to annual billing.

But then ... this practice has developed over the past number of years due to the experiences with "some" web hosts (not my current one ).

This is quite common in certain hosting markets.

I do wonder how much business sense it makes for the host in certain cases. Sometimes the discount one gets for paying in advance is quite significant, so much so that it makes one wonder if the company can actually win at the end of the year by investing those money in further growth. Especially when the "lock in" method is not being used, and the customer can get a prorated refund at any point of time.

The "lock in" method can be good in the sense that it will retain the customer for a whole year, and will be able to get an overall impression of the services. if the customer pays monthly, a small, rare issue can make him leave, without giving the host a second chance (not that there's anything wrong with that ).

As a customer myself, I would also like to have a several 2-3 different meals on the menu.

As a seller, I don't want to confuse my buyers into offering more than 3 billing options. In my point of view, annual billing is also a good strategy in keeping your customers for an entire year. Giving a free domain name or lowering hosting rates is a good offer for annual payers.

In the seller point of view, I like annual billing, but most of my customers are looking for a quarterly(3 months) or an half-yearly(6 months) accounts. And if I ask them to enroll for an annual subscription, they never do !
Our people has become more shrewed nowadays and they never believe in people. More worse is a hosting reseller. But now I have some name among my customers for my best service and quick response to their questions.
So we the sellers like annual billing, but only a few customers agree with us.

Well I had some clients, who JUST wanted a annual or semi-annual hosting plan. So therefore, I actually had to create annual type of plans. Not many people used it, but about 15% of my customers did. I don't see why it would be a problem? If the customer feels comfortable with it, then why not? It also depends on your hosting firms history and reviews people have given it

You better have all of them e.g. monthly, quarterly, semi-annually and annually. There are different type of people - some prefer monthly and some annually.

Lol, I bill my customers only on a per month basis. No yearly contracts even if they wanted to pay me like that.

I prefer to bill per month, it keeps the money coming in spread out (So I dont spend it all at once)

Annual billing is good in terms of the hosting provider coz it consumes less charges which you have to pay for your payment processor

Monthly billing is favorable in terms of the client.