Proration calculates proportional charges when subscription changes happen mid-billing cycle. This ensures customers pay fairly for upgrades while avoiding complex credit scenarios.
Proration divides charges based on the portion of a billing period remaining.
Example:
Proration occurs during:
For downgrades, quantity decreases, or removing items, schedule the change for the end of the billing period to avoid losing the remaining value.
| Component | Calculation |
|---|---|
| Daily rate | Full Amount ÷ Total Days |
| Prorated amount | Daily Rate × Remaining Days |
Scenario:
| Line Item | Calculation | Amount |
|---|---|---|
| Credit for Starter (unused) | (€10 ÷ 30) × 20 | -€6.67 |
| Charge for Pro (prorated) | (€30 ÷ 30) × 20 | €20.00 |
| Net charge | €13.33 |
The customer pays €13.33 now, then €30 at the next renewal. The unused value from the old plan offsets the cost of the new plan.
Scenario:
For immediate downgrades, the remaining value of the current plan is forfeited—no credit is issued. The customer simply starts paying the lower rate at the next renewal.
When an upgrade results in a net charge, Gilbert generates a proration invoice:
| Product | Unit Price | Qty | Total |
|---|---|---|---|
| Starter Plan (Jan 15-31, unused) | €-6.67 | 1 | €-6.67 |
| Pro Plan (Jan 15-31) | €20.00 | 1 | €20.00 |
When quantities change mid-cycle:
Scenario:
| Line Item | Calculation | Amount |
|---|---|---|
| 3 additional users (prorated) | (3 × €10 ÷ 30) × 15 | €15.00 |
Removing units mid-cycle does not generate a credit. The reduction takes effect, but the customer has already paid for the full period.
To avoid losing value, schedule quantity decreases for the end of the billing period.
When a change is applied immediately:
When scheduled for the next billing period:
If a plan change results in a credit that exceeds or equals the charge (net amount ≤ 0), no proration invoice is created. The plan change still takes effect.
For yearly subscriptions upgrading to a more expensive yearly plan:
If the current billing period hasn't been invoiced yet (e.g., subscription just activated), the full period is billed at the new rate without proration.
Changes during a trial period:
Yes, Gilbert calculates proration automatically for mid-cycle upgrades and additions.
Proration ensures fair billing. If you want to avoid it, schedule changes for the end of the billing period.
Gilbert uses whole days for calculation. A change at 3pm is treated as changing on that day.
Immediate downgrades forfeit the remaining value of the current period—no credit is issued. Schedule downgrades for the end of the billing period to avoid this.