Prorations are calculated to ensure customers only pay for the services they actually use. This document explains how prorations are calculated in our system.

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Overview

When a subscription or service period is shorter or longer than the standard billing interval, we calculate a prorated amount to adjust the charge accordingly. This ensures fair billing for partial periods.

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When prorations apply

Prorations are calculated in the following scenarios:
  • When a subscription is cancelled mid-period
  • When a subscription is upgraded or downgraded mid-period
  • When a subscription is started mid-period
  • When a subscription period is modified to be shorter or longer than the standard interval
Prorations do not apply to:
  • One-time charges
  • Items where proration is explicitly disabled
  • Periods that are equal to or longer than the standard billing interval
  • Edge cases with single-day differences

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Calculation method

The proration calculation follows these steps:
  1. Determine the period duration
    • Calculate the actual period duration in days between the start and end dates
    • Convert all dates to UTC for consistent calculations
  2. Calculate the standard interval
    • Determine the full billing interval duration in days
    • This is based on the recurring interval (e.g., monthly, yearly) and interval count
    • For monthly subscriptions, the interval length varies based on the number of days in each month (28-31 days)
  3. Calculate the daily rate
    • Divide the total amount by the number of days in the standard interval
    • This gives us the daily rate for the service
    • The daily rate will vary month to month for monthly subscriptions due to different month lengths
  4. Calculate the proration amount
    • Multiply the daily rate by the difference between the standard interval and actual period
    • The result is capped at the original amount to prevent overcharging
    • The final amount is returned as a negative value to indicate it’s a refund

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Example

Let’s look at a specific example with actual dates. Say you have a £1000 monthly subscription that starts on January 15th, 2024:
  1. Subscription period
    • Start date: January 15th, 2024
    • End date: February 15th, 2024
    • Total days in period: 31 days (Jan 15 - Feb 15)
    • Daily rate: £1000 ÷ 31 = £32.26 per day
  2. If you cancel on January 30th, 2024
    • Actual period used: 15 days (Jan 15 - Jan 30)
    • Proration amount: £32.26 × (31 - 15) = £516.16
    • You would receive a £516.16 refund
  3. If you cancel on February 5th, 2024
    • Actual period used: 21 days (Jan 15 - Feb 5)
    • Proration amount: £32.26 × (31 - 21) = £322.60
    • You would receive a £322.60 refund
Note how the daily rate (£32.26) is based on the actual number of days in your subscription period (31 days), not the calendar month length. This ensures you’re only charged for the exact days you used the service.

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Monthly variations

For monthly subscriptions, the daily rate and proration amounts can vary between different periods because they are calculated based on the actual number of days between the start and end dates, not the calendar month length. This means:
  • The daily rate is calculated by dividing the subscription amount by the total number of days in the period
  • Different periods can have different numbers of days, even if they’re the same calendar month
  • For example, a period from January 1st to January 31st has 31 days, while a period from February 15th to March 14th has 28 days
For example, a £1000 subscription could have different daily rates for different 30-day periods:
  • Period of January 1st to January 31st (31 days): £32.26 per day
  • Period of February 15th to March 14th (28 days): £35.71 per day
This means that prorations for the same billing interval could result in slightly different amounts depending on the specific start and end dates of the period. This is normal and ensures accurate billing based on the actual duration of the subscription period.

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Edge cases

The system handles several edge cases to ensure fair billing:
  • Single-day differences are ignored to prevent unnecessary small adjustments
  • Prorations are capped at the original amount to prevent overcharging