Your app allows you to prorate invoices for the first and last subscription periods.
How proration works
For the first subscription period, the invoice and credit number are prorated if the member's subscription starts not on the first day of the month. This way, all subscription renewals happen on the first day of the month, making it easier to control revenue and manage accounting.
For the last subscription period, the invoice and credit number are prorated if the member's subscription end date is set in a way that makes the last subscription period shorter than the entire cycle.
The proration coefficient is calculated by dividing the days in a prorated period by the number of days in a full period. The invoice amount and credit number are adjusted proportionally according to the proration coefficient.
To illustrate, consider a customer whose subscription starts on Jan 15th. It means that if today is January 15th and January has 31 days, then the coefficient for the invoice proration is: 31-14/ 31, which is 17/31= 0.5483871. After that, we take the coefficient and multiply it by the full subscription price. Please take into consideration the taxes that you determined are not included in that amount.
How proration for the first subscription period works
To enable proration for the first subscription period, select the "First day of the month" option in the "Billing Cycle Anchor" in your location's settings. Configure invoicing
Note that a subscription inherits a billing cycle anchor at the moment of creation. Changing the billing cycle anchor will affect future subscriptions but not the existing ones.
2. Create plans.
3. An administrator creates a subscription for a user, or a user signs up for a plan and selects the subscription start date.
4. On the subscription start date, users receive a prorated invoice and a prorated number of credits for the first incomplete month.
4. Unless the subscription end date is set within the ongoing month, the subscription renews on the first day of the month in all subsequent subscription periods.
When signing up for a plan by themselves, the "Renewal" property is automatically turned on for the user's subscription if the start date is other than the first day of the month. To set their subscription's end date, the user needs to contact the administrator.
How proration for the last subscription period works
Proration for the last subscription period automatically applies if the member's subscription end date is set in a way that makes the last subscription period shorter than the entire cycle.
Administrators create subscriptions for a user or company and select the desired end date in it.
With the final subscription renewal, users receive a prorated invoice and a prorated number of credits for the last incomplete period.
For weekly plans, invoice proration applies if the end date is set so that the last subscription period is less than 7 days.
FAQs
How does proration for the annual plan work?
How does proration for the annual plan work?
When signing up for an annual plan on a day other than the first day of the month, proration rules still apply for the first subscription period. The user receives a prorated invoice and a corresponding prorated allocation of credits for the first incomplete subscription period which lasts until the end of the ongoing month. Subsequently, the subscription automatically renews on the first day of the following month, and the invoice at a full annual rate is issued with a complete allocation of credits for the entire year.