Proration explained: charging fairly for mid-cycle changes

Customers rarely change plans on the first day of a billing cycle. Proration is how you charge fairly when they change in the middle.

The basic calculation

Divide the plan price by the number of days in the period to get a daily rate, then multiply by the days remaining. Suppose a customer on a 3,000 monthly plan upgrades to a 6,000 plan with 10 days left in a 30-day cycle:

• Credit for unused old plan: 3,000 / 30 x 10 = 1,000.
• Charge for new plan for the remainder: 6,000 / 30 x 10 = 2,000.
• Amount due now: 1,000.

Choose a policy

Upgrades

Usually applied immediately, with the prorated difference charged at once or added to the next invoice.

Downgrades

Often applied at the end of the current period so the customer keeps what they paid for. Some businesses give a credit instead, which carries to the next invoice.

Seat changes

Adding seats is typically prorated. Removing seats mid-cycle is more often effective next cycle. Whatever you choose, say so on the pricing page.

Make it visible

Show proration lines separately on the invoice, with dates. A line reading 'Pro plan, 21 Oct to 31 Oct (11 days)' avoids most questions.