When a customer changes the subscription plan in the middle of the billing cycle, we will pro-rate charges for the rest of the billing period. Depending on whether it is an upgrade / downgrade the appropriate proration logic will be applied.
Why we prorate charges for YesHello? Since we allow changes to subscription plans in the middle of a billing cycle, it is important to align your usage charges based on your consumption. To make this effective, we have outlined a clear & unambiguous way of prorating charges that is fair to your business.
In this scenario, instead of upgrading, your customer switches to a lower plan. The calculations are similar, but this time instead of asking the customer to pay an extra amount above their previously-paid subscription amount, there will be a credit that has to be adjusted against the customer's next billing. The following illustration will give a better idea of how the calculations work:
The steps are similar to the previous example, but the customer has decided to downgrade the plan.
So, this time we will calculate the amount owed per day and deduct it from the lower-tier plan amount. But, again you will not deduct the entire lower-tier plan amount.
Calculate the per day charge of the lower tier plan ($100/30) and multiply it by the number of days remaining in that month (15).
The amount that you get has to be deducted from the credits ($150). The excess of $100 will be adjusted in the next month's billing.
Current Plan: $300 / month
New Plan: $100 / month
$300 paid at the beginning of the billing cycle
Assume, changes are made exactly in the middle of billing cycle.
Prorated “consumed” charge $150
Prorated credit remaining is $150
The charge on the new plan for the remaining period: -$100