How to Handle:
“We don't do annual contracts”
Resistance to annual contracts often reflects past bad experiences or cash flow concerns. Understanding the 'why' behind this policy helps you address it effectively.
Why Prospects Say This
They've been burned by vendors they couldn't escape. Cash flow makes upfront annual payments difficult. Their procurement process requires specific terms. They want to stay flexible.
Best Responses
The Value Trade-off
“I understand the hesitation. Here's the trade-off: annual contracts save you [X]% versus monthly because we can plan better too. Would the savings change the equation, or is monthly the only option?”
Why It Works
Makes the cost of flexibility explicit.
Best For
When discounts can incentivize annual
The Monthly Option
“We can do monthly—flexibility has value. Most customers start monthly and switch to annual once they see the ROI and want the discount. Would starting monthly work while you validate?”
Why It Works
Meets them where they are with a path to annual.
Best For
When you offer monthly options
The Why Behind the Policy
“Can I ask what drives that policy? If it's about getting trapped, we have exit provisions. If it's cash flow, we can do annual terms with monthly payments. Understanding helps me see what might work.”
Why It Works
Gets to the real concern behind the blanket policy.
Best For
Understanding the underlying issue
Do's and Don'ts
Do This
- Understand why they have this policy
- Offer monthly with clear annual discount
- Address cash flow concerns with payment terms
- Highlight exit clauses or success provisions
Don't Do This
- Refuse to negotiate on contract terms
- Make annual the only option
- Dismiss their policy as unreasonable
- Sacrifice too much margin for monthly terms
Follow-up Questions to Ask
“What's driving the preference for shorter terms?”
“Would annual with monthly billing address cash flow concerns?”
“If we had exit provisions, would annual be more palatable?”
“What contract terms does your procurement typically require?”
Industry-Specific Variations
“We only do month-to-month”
“Startups need flexibility—we do too. Let's start monthly so you can validate fit. Once you're seeing results, annual gives you a 20% discount and locks in the price before we raise it.”
“Our procurement requires annual contracts”
“Perfect—we typically do annual with enterprise clients. We can align terms to your fiscal year and include the milestones your procurement team needs for approval.”
Pro Tips
- Monthly pricing should be at least 15-20% higher to offset churn risk
- Annual with monthly billing can address cash flow while locking in commitment
- Enterprise buyers often prefer annual for budget predictability
- Clear renewal terms and exit clauses can make annual more attractive
Tired of Handling Objections?
Let us handle the prospecting and objections for you. We book qualified meetings with decision-makers who are ready to talk - no cold call rejections.
Get Qualified Meetings