Overview
This article explains how proration works in gaiia. Proration lets a customer change their subscription at any point in a billing cycle and be charged only for the days they actually hold the service.
The single most important rule to know is that the end date of a prorated period is excluded from the charge. This article covers that rule, how to enter a date range that charges a full month, how the calculation is performed, and how gaiia's automated workflows handle proration on your behalf.
How proration works
Proration makes it easy for a customer to change their monthly charges whenever they want. If a customer on a monthly service adds a new service in the middle of their billing period, they get access to it right away and are charged only for the number of days they hold it.
For example, if a customer's billing period starts on the 1st of a 30-day month and they add a new service on the 11th, they hold that service for 20 days. The debit is prorated from the 11th of the month to the 1st of the following month, which equals 20 days. On a $15.00 monthly service, they are charged $10.00.
The prorated amount appears in the customer's current balance. It is not due immediately. It is there to show what they will owe once the invoice is generated.
The same concept applies whether an agent changes a subscription manually or one of gaiia's automated workflows does it.
The end date is excluded
The end date you enter is the first day not covered by the charge. A range of July 1 to July 31 bills July 1 through July 30, which is 30 days, not 31.
All proration in gaiia is calculated on a real-day basis. We never assume a month is 30 days, and we account for the exact number of days in each month. gaiia takes the difference between the two dates rather than the absolute number of days they span.
The calculation is:
Prorated amount = (monthly price ÷ days in the billing period) × (end date − start date)
This means a range that looks like a full calendar month bills one day short. On a $100.00 monthly subscription:
| Range entered | Days billed | Amount charged |
|---|---|---|
| July 1 to July 31 | 30 of 31 | $96.77 |
| June 1 to June 30 | 29 of 30 | $96.67 |
| February 1 to February 28 | 27 of 28 | $96.43 |
To prorate for a specific number of days, enter a range whose difference equals that number of days. To bill 15 days, enter November 1 to November 16.
Charging a full month
To charge the full monthly subscription amount, set the end date to the first day of the following month. This holds regardless of how many days are in the month, so a 28-day month and a 31-day month both charge the same full price.
| To cover | Start date | End date | Amount charged |
|---|---|---|---|
| All of June | June 1 | July 1 | Full monthly price |
| All of July | July 1 | August 1 | Full monthly price |
| All of February | February 1 | March 1 | Full monthly price |
Before saving a prorated transaction, click the Calculate button to preview the amount. The preview uses the same calculation as the saved transaction, so you can confirm the figure is what you expect rather than correcting it afterward.
Worked example
A $59.90 monthly subscription is prorated from November 1 to November 15. For manual debits and credits, gaiia calculates it as follows:
- The difference between November 1 and November 15 is 14 days.
- The total number of days in November is 30 days.
- The prorated charge is $59.90 × (14 ÷ 30) = $27.95.
Had the absolute number of days been used instead (15), the charge would have been $59.90 × (15 ÷ 30) = $29.95. The $1.00 difference is the excluded end date.
To charge those 15 days, enter November 1 to November 16.
Proration in automated workflows
gaiia's automated workflows, including speed modification, suspension, and activation, already account for the excluded end date and capture the full amount owed. You do not need to adjust anything for these.
For example, with a fixed bill day on the 1st of the month, activating a customer on November 15 produces a prorated debit from November 15 to December 1. The December 1 end date is excluded, so the charge covers November 15 through November 30.
When the customer sees the amount
The customer sees the amount they owe once the invoice is generated. To collect it immediately, an agent can create an invoice directly. Otherwise the prorated amount is included in the customer's next regular bill along with everything else.