When you create a monthly plan, under its Billing settings, you can decide whether the system should prorate it or not. Here is what will happen to memberships based on a billing plan, which proration is turned on.
What you'll need first
OfficeRnD will prorate recurring membership fees if you get a new sign-up that does not fall within your specified billing date each month. If your regular monthly billing occurs on the anniversary date that a member signs up, then their invoices will not be prorated.
For example, if the billing date of a member is the 1st and their membership ends on the 20th, OfficeRnD will prorate their last invoice and charge them for 20 days of usage instead of charging them for the full month usage.
There are two options that control how the membership start will be prorated if it doesn't match the recurring billing date. Both options are available under Settings/Invoicing:
- First invoice: This option will prorate the first invoice for the membership.
- Second invoice: This option is useful when you want to have a minimum commitment of one month for members that start a new membership. It will bill the member one full month and prorate the second invoice the same way as the first option. Please note that this option applies only to new customers. Upgrades and downgrades are handled the same way as the First invoice option.
Here is how the proration works in general:
- As discussed above, the first or second invoice for membership is being prorated accordingly.
- When a membership is terminated (either because of an upgrade, downgrade, or the member is leaving), the last days of the membership are also prorated if the termination date is not the day before the billing date.
- The quantity of the prorated membership is calculated as follows: (days count) * 12 / 365. This means that if it's prorated from Jan 15th to Jan 31st then there are 17 days and the quantity would be 17 * 12 / 365 = 0.56.