What is proration in billing?
Proration charges a customer for only the part of a billing period in which a price or quantity applied, when a subscription starts, ends or changes mid-period. The usual basis is days: the period's price times the days in force, divided by the days in the period, with each line rounded once to the cent.
How a prorated charge is calculated
Split the period at the day of the change and price each part on its own quantity. An upgrade adds a charge for the days left; a downgrade credits them back.
Prorated charge = (Quantity × Price for the full period × Days in force) ÷ Days in the period
A worked example
In the illustrative example, Fulmar Grosgrain Inc moves from 148 to 186 seats on 12 June 2026, at $413.51 a seat a month, and June has 30 days.
| Operation | Line | Figure |
|---|---|---|
| 148 seats for 11 days, 1 to 11 June | $22,439.81 | |
| + | 186 seats for 19 days, 12 to 30 June | $48,711.48 |
| + | Metered usage | $3,448.71 |
| = | INV-6104 | $74,600.00 |
Each seat line is the formula once: 148 × $413.51 × 11 ÷ 30, then 186 × $413.51 × 19 ÷ 30, each rounded once to the cent. From July the account bills $76,912.86 a month for 186 seats.
Common mistakes
Counting the change day twice
The day a change takes effect bills at the new quantity only. Fulmar Grosgrain's 11 days and 19 days make June's 30.Rounding every day
Rounding a daily rate before multiplying drifts by cents over a long period. Round each line once, at the end.Dropping the credit on a downgrade
When seats fall in a period already billed, the unused days come back as a credit. Quern Selvedge Inc's drop from 16 to 14 seats on 20 June returns $183.33 for 2 seats over 11 days.
How Verlix handles it
The Invoice agent prices a seat or plan change to the day from the contract's own terms, rounds each line once, and puts both parts of the month on one invoice. Every draft is checked against its contract before it can send.
Subscription billingRelated terms
Usage-based billing
Charging for what a customer consumed, rated on its contract's own price table.ARR
The yearly value of committed recurring revenue, measured on one day.Deferred revenue
Billed or collected but not yet earned, a liability until the work is done.