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Proration

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?

When a subscription changes before the end of a billing period, proration calculates:
  • Credits for unused time on the old plan
  • Charges for remaining time on the new plan
Example: 
Billing Period: Jan 1 - Jan 31 (31 days)
Change Date: Jan 16

Old Plan: $100/month
- Days Used: 15
- Credit: $100 × (15/31) = $48.39

New Plan: $200/month
- Days Remaining: 16
- Charge: $200 × (16/31) = $103.23

Net Charge: $103.23 - $48.39 = $54.84

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Proration Behaviors

BehaviorDescriptionUse Case
Full ProrationCredit unused time, charge for remaining timeStandard upgrades/downgrades
No ProrationNo credits or charges until next periodEnterprise contracts
Credit OnlyCredit unused time, no immediate chargeDowngrades
Charge OnlyCharge for new plan, no creditPromotions

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How It Works in the Dashboard

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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

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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

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Upgrade Mid-Cycle

Customer upgrades from 100/monthto100/month to 200/month on day 15 of 30:
ItemCalculationAmount
Credit for Starter$100 × (15/30)-$50.00
Charge for Pro$200 × (15/30)+$100.00
Net Due$50.00

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Downgrade Mid-Cycle

Customer downgrades from 200/monthto200/month to 100/month on day 20 of 30:
ItemCalculationAmount
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.

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Add Product Mid-Cycle

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