Prepaid vs Pay-As-You-Go Subscriptions: Which to Offer

Every subscription plan makes one structural choice before any of the others: does the customer pay per delivery, or pay once for many deliveries?

Pay-as-you-go

Bill each cycle as it ships.

Converts better. The commitment at checkout is one delivery’s worth of money. For a ₹1,499 box, the customer is agreeing to ₹1,499 today, not ₹8,994.

Churn is continuous. Every cycle is a decision point, and some proportion of subscribers exit at each one.

Cash arrives slowly, which matters if you are buying inventory ahead of demand.

Renewals can fail. Each one is a fresh payment that can decline, and in markets with mandate frameworks each one depends on that mandate still being valid.

Prepaid

Take payment for N deliveries at once.

Cash now. You have the money before you buy the stock, which is a materially different working-capital position.

Near-zero churn during the term. There is no monthly decision point because there is no monthly charge. The subscriber is committed through the paid period.

Higher LTV per signup, usually — even at a bigger discount, six guaranteed deliveries typically beat the expected value of a monthly plan that churns.

Converts worse. The checkout ask is much larger. Expect fewer signups.

Renewal is a cliff. At the end of the prepaid term the customer makes one big decision rather than six small ones. Prepaid renewal needs its own reminder sequence starting well before the term ends.

The market-specific reason prepaid matters

In India, recurring debits clear without per-charge authentication only below a per-transaction limit — ₹15,000 for most categories. Above it, the customer must approve every single renewal.

That makes high-value recurring plans structurally fragile. Prepaid sidesteps it entirely: one authenticated payment at checkout, where the customer is already authenticating and expects to, then scheduled deliveries with no further debits.

So in India prepaid is not just a cash-flow preference. For anything above the limit it is usually the only structure that works reliably. Detail here.

Discounting prepaid

Prepaid should carry a bigger discount than pay-as-you-go, because the customer is giving you money early and accepting commitment risk.

A common structure:

Plan	Discount	What you get
One-time	0%	Nothing
Monthly, pay as you go	10%	Repeat revenue, monthly churn
3 months prepaid	15%	Quarter of cash up front
6 months prepaid	20%	Half a year committed

The discount ladder should reflect the value of the commitment, and the steps should be visible next to each other so the customer can see the trade they are making.

Offer both

They are not competing options; they suit different customers. Someone trying your product wants pay-as-you-go. Someone who already loves it and wants the best price wants prepaid.

On Shopify these are two selling plan groups on the same product, presented as two choices. Nothing stops you offering both, and offering both usually beats picking one.

Operationally

Prepaid demands more discipline:

• Deliveries are an obligation, not a revenue event. You have been paid; every delivery after that is cost. Forecast it.
• Refunds are messier. A cancellation mid-term means calculating the value of undelivered cycles and issuing a partial refund — with a credit note if you are invoicing under GST.
• Renewal needs a runway. Start reminding four to six weeks before the term ends.

Super Subscription treats prepaid as a first-class plan type, with the delivery schedule tracked separately from the billing schedule.

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Frequently asked questions

What is a prepaid subscription?

The customer pays once for a set number of deliveries — say six months up front — and those deliveries are then scheduled without further charges. Billing happens once; delivery happens many times.