How does yearly billing work for seat-based saas?

Hi there,

I want to add yearly billing to my SAAS, but wondering how it really works. Let's say I have a seat-based saas and one of my customers wants to pay yearly. They have 5 users right now and will maybe grow to 10 in 6 months. My pricing is $5 / month.

When would you charge them? In 12 months from now or upfront? If upfront, how do you manage that the number of users will change over time?

Update, answering myself, here's how Slack does it:

• when you activate your paid plan, you get immediately charged for the number of users in your team. Either for a full year or for a full month.
• if you add members later on, then Slack computes a pro-rata for this user based on your monthly price and either charge you for a month or a full year

I think I'll go for that :)

Thanks!