Proration

Understand how mid-cycle subscription changes are prorated

Proration ensures customers are charged fairly when subscriptions change mid-billing cycle. This guide explains how Alguna calculates prorated amounts for upgrades, downgrades, and other mid-cycle changes.

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What Is Proration?

How Proration Is Calculated

Alguna prorates automatically when a change takes effect part-way through a billing period. It credits the unused portion of what was already billed and charges for the remainder of the period on the new terms.

Example:

Billing period: Jan 1 – Jan 31 (31 days)
Change date:    Jan 16 (16 days remaining)

Old plan: $100/month
  Credit for unused time: $100 × (16/31) = $51.61

New plan: $200/month
  Charge for remaining time: $200 × (16/31) = $103.23

Net charge: $103.23 − $51.61 = $51.62

Both halves are computed over the same remaining days, so an upgrade nets the price difference for the rest of the period and a downgrade nets a credit.

Whether the customer sees this on an invoice now or at the end of the period depends on when the change takes effect and how the subscription bills. Preview the change before you publish it: the preview shows the exact proration lines that will be produced.

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How It Works in the Dashboard

When Creating a Subscription Change

1. Navigate to Subscriptions → [Subscription]
2. Click Edit Subscription or Create New Version
3. Make your changes (upgrade, add product, etc.)
4. Choose the Effective Date:
   • Immediate: Proration calculated for current period
   • End of Period: No proration (change starts with new period)
5. Review the Proration Preview showing:
   • Credit amount for unused time
   • Charge amount for new items
   • Net amount due
6. Publish the change

Viewing Proration on Invoices

1. Navigate to Invoices → [Invoice]
2. Prorated line items show:
   • Original item with credit
   • New item with prorated charge
   • Date range for each

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Proration Examples

Upgrade Mid-Cycle

Customer upgrades from $100/month to$200/month on day 15 of 30:

Item	Calculation	Amount
Credit for Starter	$100 × (15/30)	-$50.00
Charge for Pro	$200 × (15/30)	+$100.00
Net Due		$50.00

Downgrade Mid-Cycle

Customer downgrades from $200/month to$100/month on day 20 of 30:

Item	Calculation	Amount
Credit for Pro	$200 × (10/30)	-$66.67
Charge for Starter	$100 × (10/30)	+$33.33
Net Credit		-$33.34

The credit is applied to the next invoice.

Add Product Mid-Cycle

Customer adds a $50/month add-on on day 10 of 30:

Item	Calculation	Amount
Prorated Add-on	$50 × (20/30)	+$33.33

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Disabling Proration

For specific scenarios, you can disable proration:

1. Navigate to Subscriptions → [Subscription]
2. Click Edit Subscription
3. In the proration section, select No Proration
4. The change will take effect without any mid-cycle credits or charges

Disabling proration is useful for enterprise contracts or when you want changes to take effect without financial adjustment.

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Best Practices

Preview Before Publishing

Always review the proration preview before publishing changes.

Communicate to Customers

Let customers know about prorated charges before making changes.

Align with Billing Cycles

When possible, schedule changes for period end to avoid proration.

Document Exceptions

Record why proration was disabled for specific customers.

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Next Steps

Amendments

Learn about subscription amendments.

Versioning

Understand subscription versioning.