What is proration?
Proration is the adjustment a billing system makes when a subscription changes partway through a billing period. Instead of charging a full period, it bills or credits the customer for the portion of the period actually used — so an upgrade, downgrade, or cancellation mid-cycle is reflected fairly on the next invoice.
Free and open-source under AGPLv3 — self-host today, or talk to us about cloud.
When a customer upgrades, downgrades, or cancels in the middle of a billing period, charging them a full period’s fee would be inaccurate. Proration splits the period: the customer is charged for the time spent on the old plan and the new one, and any difference appears as a charge or credit.
For example, a customer who upgrades halfway through a month is credited for the unused half of the cheaper plan and charged a prorated amount for the more expensive one. Proration keeps invoices fair and predictable, and a good billing engine calculates it automatically rather than leaving it to manual adjustments.
Related terms
Billing for the rest of us.
GetPaidHQ is open-source, self-hostable billing on any processor. Run it free, or talk to us about managed Cloud.
Free and open-source under AGPLv3 — self-host today, or talk to us about cloud.