Pro-ration logic in subscriptions
The Proration feature in Chargebee helps calculate the adjusted amount for a subscription when it is changed in the middle of a billing term. This feature is primarily useful for SaaS businesses, where billing is done based on the time for which a service is used. If you have an E-Commerce business, you could simply disable Proration on your site.
To enable/disable proration, head to Settings > Configure Chargebee > Billing LogIQ and check the "Enable Proration" checkbox.
In Chargebee, an invoice is generated at the beginning of a billing term (Advance Billing). If a customer chooses to upgrade or downgrade their subscription during the middle of a month, the remaining amount for the existing plan should be credited and the new plan amount for the remaining period should be charged.
Assume that a subscription is created on a monthly Plan A for $30 on 1st Nov. The Subscription is changed(Upgraded) to Plan B for $100 on 15th Nov.
Credits issues from Plan A for the unused term = ($30/30)*15 = $15
Charges for the new Plan B for the remaining term = ($100/30)*15 = $50
New Invoice amount = $50
Amount to be charged = $50-$15(Credits) = $35
Renewal amount(Plan B) = $100
Chargebee prorates charges to the second.
The same proration logic is applied to recurring add-ons linked with the subscription.
Non-recurring add-ons are not prorated.
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