What are Proration and Term Settings?

Proration settings on the Subscription Item (or Rate Plan) allow you to define whether the Quantity or Rate should be prorated in the case of partial periods.

Proration works in tandem with the Term Settings Per Term field, which defines what those periods are (i.e. weekly, monthly, yearly, etc.).

Scenario

A customer signs up on January 15th for a streaming service with a monthly fee of $50. The customer is charged for each device they plan to stream on, which is 2. The customer will be charged monthly on the first of the month.

Example: Prorate Rate by Days

• The Rate is calculated as Rate / Number of Days in Charge Period * Active Days in Charge Period (50/31 * 17).
• The Amount is then calculated as Quantity * Term Multiplier * Rate (2*1*27.42)

Example: Prorate Quantity by Days

• The Quantity is calculated as Active Days in Charge Period / Number of Days in Charge Period * Quantity (17/31 * 2).
• The Amount is then calculated as Quantity * Term Multiplier * Rate (1.0968*1*50).

Example: Do Not Prorate

• No Proration is applied. 

• The Amount is calculated as Quantity * Term Multiplier * Rate (2*1*50).

Example: Per Term (Months)

• When Per Term is set, the Proration Type is automatically set to Do Not Prorate.
• The Term Multiplier calculates the number of active days in the Charge Period (17/31).
• The Rate on the Charge is calculated with the Rate (on the Subscription Item) * Term Multiplier.
• The Amount is calculated Quantity * Term Multiplier * Rate.

Expected Behaviors

Prorate Rate by Days and Additional Discount Amount

When an Additional Discount Amount is applied and the Subscription Item is prorating the Rate by Days, the Additional Discount Amount is prorated as well.

1. The Term Rate is calculated as Rate / Number of Days in Charge Period * Active Days in Charge Period (50/31 * 17).
2. The Additional Discount Amount is calculated the same way: Additional Discount Amount / Number of Days in Charge Period * Active Days in Charge Period (10/31 * 17).
3. The Rate is calculated as Term Rate - Discount (27.42 - 5.48).
4. The Amount is then calculated as Quantity * Term Multiplier * Rate - Discount (1*1*21.94).

Prorate Quantity by Days and Additional Discount Amount

When an Additional Discount Amount is applied and the Subscription Item is prorating the Quantity by Days, the Additional Discount Amount is not prorated.

1. The Quantity is calculated as Active Days in Charge Period / Number of Days in Charge Period * Quantity (17/31 * 1).
2. The Additional Discount Amount is not prorated.
3. The Rate is calculated as Term Rate - Discount (50 - 10).
4. The Amount is then calculated as Quantity * Term Multiplier * Rate (0.5484*1*40).

Prorate Rate by Days and Additional Discount Percentage

When an Additional Discount Percent is applied and the Subscription Item is prorating Rate by Days, the Additional Discount Percent is prorated as well.

1. The Term Rate is calculated as Rate / Number of Days in Charge Period * Active Days in Charge Period (50/31 * 17).
2. The Additional Discount Percentage is calculated the same way: Term Rate (i.e. Rate / Number of Days in Charge Period * Active Days in Charge Period) * Additional Discount Percentage.
3. The Rate is calculated as Term Rate - Discount (27.42 - 4.113).
4. The Amount is then calculated as Quantity * Term Multiplier * Rate (1*1*23.307).

Prorate Quantity by Days and Additional Discount Percentage

When an Additional Discount Percentage is applied and the Subscription Item is prorating Quantity by Days, the Additional Discount Percent is not prorated.

1. The Quantity is calculated as Active Days in Charge Period / Number of Days in Charge Period * Quantity (17/31 * 1).
2. The Additional Discount Percent is not prorated.
3. The Rate is calculated as Term Rate - Discount (50 - 7.5).
4. The Amount is then calculated as Quantity * Term Multiplier * Rate (0.5484*1*42.5).