Pro Rata

Pro rata is a Latin term that means “in equal portions” or “in proportion”.

Pro-rata-based calculations help ensure each party receives its fair share in proportion to the whole.

Let’s say you pay a sum of $1,200 to subscribe to a software service. The subscription is valid for a year. But after using the product for 9 months, you choose to cancel the subscription and require a refund. The service provider might accept your request and issue a refund on a pro rata basis. That is, the service provider will deduct $900 for the nine months you have used the product and give a refund of #300 for the time remaining.