Pay-as-you-go vs Auto-renew prepaid

Choose between flexible recurring charges or upfront prepaid commitments for your subscription plans.

Introduction

When creating a subscription plan, you need to choose a payment type. This determines how and when your customers are charged for their recurring orders.

Joy Subscriptions offers two types:

• Pay-as-you-go — Your customer pays a small amount each delivery cycle

• Auto-renew prepaid — Your customer pays a larger amount upfront for multiple deliveries at once

The type you choose directly impacts your revenue timing, customer commitment level, and how orders appear in your Shopify admin. Understanding the difference helps you design plans that match your products and your customers' buying behavior.

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Understanding the difference

Here is the simplest way to think about it:

Pay-as-you-go is like a monthly phone plan — you pay each month for that month's service. If you cancel next month, you stop paying.

Auto-renew prepaid is like buying a 6-month gym membership upfront — you pay once for the entire period. You get access every month, but the payment already happened.

	Pay-as-you-go	Auto-renew prepaid
When customer pays	Every delivery cycle	Once upfront for multiple cycles
Amount per charge	Smaller (1 delivery)	Larger (multiple deliveries)
Orders in Shopify	1 new order per cycle	1 order containing all deliveries
Deliveries	1 shipment per order	Multiple scheduled shipments from 1 order
Customer flexibility	High — skip, pause, cancel anytime	Lower — already committed and paid
Your cash flow	Steady and predictable	Immediate lump sum
Churn risk	Higher — easy to cancel	Lower — customer already invested

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Pay-as-you-go

With Pay-as-you-go, your customer is charged once per delivery cycle. Each time a charge is processed, a new Shopify order is created automatically. This continues until the customer cancels, pauses, or skips.

The billing frequency always equals the delivery frequency. If your customer receives a delivery every month, they are charged every month.

Example: You sell Protein Powder at $40 per tub. You offer a 10% discount for subscribers who receive monthly deliveries.

What your customer sees at checkout: "Subscribe and save — $36.00/month (save 10%)"

What happens each month:

Month	Charge	Shopify order	Delivery
January	$36.00	Order #1001	1 tub shipped
February	$36.00	Order #1002	1 tub shipped
March	$36.00	Order #1003	1 tub shipped
April	Customer cancels	No order	No delivery

Total paid over 3 months: $108.00 for 3 tubs

Your customer can manage their subscription through the Customer Portal at any time — skip a delivery, pause for a month, swap to a different product, or cancel entirely.

When to use Pay-as-you-go:

• You sell everyday consumables that customers reorder regularly (coffee, pet food, vitamins, skincare)

• You want a low barrier to entry — customers are more likely to subscribe when the first charge is small

• Your customers value flexibility and want the ability to cancel easily

• You are just starting with subscriptions and want to test the market

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Auto-renew prepaid

With Prepaid, your customer pays once for multiple deliveries. At checkout, Joy Subscriptions creates one Shopify order with the total quantity for all scheduled deliveries. The app then automatically fulfills each delivery on the right date.

The billing frequency is always a multiple of the delivery frequency. For example, if your customer receives a delivery every month but pays every 3 months, they are charged for 3 deliveries at once.

Example: You sell Coffee Beans at $20 per bag. You offer a 15% discount for customers who prepay for 3 months of monthly deliveries.

What your customer sees at checkout: "Prepaid — $51.00 every 3 months (save 15%)"

What happens at checkout:

• Customer is charged $51.00 ($17.00 × 3 bags)

• Shopify creates Order #1001 with quantity: 3

Delivery schedule from that single order:

Delivery	Date	Status	Shipment
1st	January 15	Fulfilled	1 bag shipped immediately
2nd	February 15	Scheduled	1 bag ships automatically
3rd	March 15	Scheduled	1 bag ships automatically

After 3 months: The subscription auto-renews. Customer is charged $51.00 again for the next 3 deliveries.

Total paid over 3 months: $51.00 for 3 bags

Notice the difference: with Pay-as-you-go, the same 3 bags at 10% off would cost $54.00 ($18 × 3). With Prepaid at 15% off, it costs $51.00. The customer saves more by committing upfront, and you receive the full payment immediately.

When to use Prepaid:

• You sell gift subscriptions or curated boxes (the buyer pays once, the recipient gets monthly deliveries)

• You want to collect revenue upfront instead of waiting month by month

• You want to reduce cancellations — customers who have already paid are far less likely to churn

• You offer a bigger discount as an incentive for upfront commitment

• You sell seasonal or limited-edition products with a fixed number of deliveries

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Choosing the right type for your store

Your situation	Recommended type	Why
Everyday consumables (food, supplements, skincare)	Pay-as-you-go	Customers expect flexibility for routine purchases
Gift subscriptions or holiday boxes	Prepaid	Buyer pays once, recipient enjoys deliveries
New store testing subscriptions	Pay-as-you-go	Lower commitment attracts more first-time subscribers
High cancellation rate you want to reduce	Prepaid	Upfront payment increases retention
You need cash flow immediately	Prepaid	Revenue collected upfront, not spread over months
Customers want the cheapest per-unit price	Prepaid	Offer a bigger discount for bulk commitment

You can offer both. Create two plans on the same product — one Pay-as-you-go with a smaller discount (e.g., 10% off) and one Prepaid with a bigger discount (e.g., 15% off). This lets your customers choose the option that works best for them, while the larger discount on Prepaid naturally encourages longer commitments.

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Overall

Pay-as-you-go charges your customer once per delivery cycle, creating a new order each time. It is flexible, easy to cancel, and ideal for everyday products where customers want low commitment.

Prepaid charges your customer once for multiple deliveries, creating a single order with scheduled fulfillments. It collects revenue upfront, reduces churn, and works best for gift subscriptions, curated boxes, and loyalty rewards.

If you are unsure which to start with, begin with Pay-as-you-go to build your subscriber base, then introduce Prepaid plans as a premium option for customers who want better savings.

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