Subscription annual commitments - How do they work in your application?

A lot of SaaS companies offer annual plans at a discounted price. For example the plan costs 10 USD/ month but if you commit for a year, it is 8 USD/month. You still pay monthly but a discounted rate. If the user cancels their subscription, they are charged for the remaining amount for the year (e.g. if they cancel in 5 months then they are charged for the remaining 7 (months) * 8 USD = 56 USD. Now the question is: What happens when, after 5 months, the user upgrades to the next (most expensive plan)? Do you allow this? At what rate and for how long? (for example, in the above scenario, the user upgrades after 5 months. Do they then pay the discounted rate of the new plan for the remaining 7 months?) Same question around the downgrade? (to a lower but still paid plan). If i havent confused the hell out you, i d love to hear your ideas and experience. best,