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