Pro-rata charge is generated for a period between the contract start date and the billing cycle start date of the immediate billing cycle month. Prorata charge is enforced to generate a proportionate amount for the actual service usage period.
If the number of days of service provided to the customer is lesser than the billing cycle period then to align the service usage period with the billing cycle period, charge value is taken in proportion to the actual service usage days.
Prorata charge is calculated on the recurring charges (i.e. subscription charges) only when the start date of the contract is other than the billing cycle start date.
Pro-rata rule is applied while defining pricing for a plan. Pro-rata charges are calculated based on the following rules:
Compute Exact Amount: As per this rule, prorata charges are generated for the number of days a customer avails the services. In this case, prorata amount is calculated from contract start date to end of the billing cycle date.
For example: Let's consider, a customer billing cycle date is 1st of every month and service is provided to him on 16th of April. If you apply this rule to calculate prorata amount then prorata charges are generated for the exact service usage period, i.e. for 15 days (from 16th of April to 30th of April).
Charge for Full Month: As per this rule, prorata charges are generated for the entire month irrespective of the service usage period. In this case, contract start date is not considered and prorata amount is calculated for the whole billing cycle period.
For example: For the above case, if you apply this rule to calculate prorata amount then prorata charges are generated for the whole month, i.e. for 30 days (from 1st of April to 30th of April).
Waive Prorated Amount: As per this rule, no prorata charges are generated even if the contract start date is other than billing cycle start date. In this case, the service is provided free to the customer for the initial month.
For example: For the above case, if you apply this rule to calculate prorata amount then zero prorata charges are generated for the initial month.
Custom Rule: Apart from the above types, user is also allowed to define his own custom prorata rule in the system.
For example: User can define his own rule to calculate prorata charges for the whole month if a customer contract start date is between 1st to 15th of a month and he can impose zero prorata charges if his contract start date is beyond 15th, i.e. between 16th to end of a month.