Proration

You can enable or disable proration to adjust charges for your customers’ subscriptions based on the actual usage or the period of service. With proration, you can ensure that your customers are billed accurately for any changes made to their subscriptions, such as upgrades or downgrades.

Why do you need prorated billing for your subscription business?

Prorated billing allows you to charge your customer only for the period they have used your service or product. This is particularly helpful because of the following reasons:

Scenario 1: Aaron Brown is currently subscribed to the Basic plan of Zylker. He decides to switch to the Professional plan in the middle of the billing cycle. Zylker has enabled Prorated Billing to find out the exact amount that Aaron Brown needs to pay for the upgrade. This is how proration will be calculated for Aaron Brown:

Basic Plan: $300/month
Professional Plan: $500/month
Last Billing Date: April 5th
Current Date: April 15th
Number of days the Basic Plan was used: 10
Credits: $300 - [($300÷30)*10] = $200
Number of days remaining: 20
New Invoice Amount: [($500÷30)*20] = $333.33
Amount to be billed: $333.33 - $200 = $133.33
Next Billing Date: May 5th

An invoice will be generated on 15th April for Aaron Brown with an amount of $333.33 will be generated for the rest of the month. A credit note of $200 will also be generated, which will be applied on the invoice. Aaron Brown will be billed for the remaining amount, i.e., $133.33 on 15th April.

Scenario 2: Aaron Brown is currently subscribed to the Standard plan of Zylker. He decides to downgrade to the Starter plan.With proration enabled in Zoho Billing, Zylker can find out the exact amount that should be refunded to Aaron Brown. This is how proration will be calculated for a downgrade:

Standard Plan: $300/month
Starter Plan: $100/month
Last Billing Date: April 5th
Current Date: April 20th
Number of days the Standard Plan was used: 15
Credits: $300 - [($300÷30)*15] = $150
Number of days remaining: 15
New Invoice Amount: $100÷30*15 = $50
Credits Applied on Invoice: $50
Credits Available: $100
Next Billing Date: 5th May

An invoice will be generated on 15th April for Aaron Brown with an amount of $333.33 will be generated for the rest of the month. A credit note of $200 will also be generated, which will be applied on the invoice. Aaron Brown will be billed for the remaining amount, i.e., $133.33 on 15th April.

Enable or Disable Proration

To enable or disable proration for your subscriptions:

Once you have enabled Proration from Settings, you can manually enable or disable proration while creating a new subscription. Here’s how:

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