Earlier quoted context omitted.
There shouldn't be an "Annual plan, paid monthly" option. Software vendors shouldn't be in the credit and loans business. Pay monthly for monthly plans, and pay annually once for annual plans.
Is this any different from AWS offering reserved instances? The pricing structure is the same: you pay by the month but commit to a year. Reserved instances seem perfectly fair to me: what's different here?
Some things like apartment leases are not only in a different context, but it's done for a clear reason. Reserved instances on AWS I'm assuming has a similar purpose but it's also in a different context and it's hopefully made very clear to the user.