# Proration

Proration is a billing concept that is applicable to Subscription Products. Subscription products pricing is based on a fixed time e.g., per day or per month or per year etc.

Proration applies when something is changed mid-period to determine the price to charge for the partial period.

MonetizeNow supports the following proration types:

- Day-Based
- Calendar-Month-Based
- Month-Based

# Day-Based

In the Day-Based proration method, we use the number of days as the way to calculate proration. More specifically, the proration is decided based on the number of days between the end date and the start date.

Let's understand this concept by using an example.

Let's say the price of a Product is $120/year

We need to determine the price of this product for a period of 6 months, with the following dates.

**Start date** = Feb 15, 2023

**End date** = Aug 14, 2023

**Here's how Day Based Proration will work in this case:**

- Day-based proration = Days between (Aug 14 - Feb 15) = 180
- Total days in a year starting on Feb 15, 2023 = 365
**Proration**= 180 / 365**Price**= $120 * 180 / 365 = $59.18

Leap-year consideration

The denominator in the above equation will be 366 in leap years.

# Calendar-Month Based

In the Calendar-Month proration, the first and the last month will be fractional

**There are three parts to this type of proration:**

- Use fractional days in the first month, if not a whole month
- Count whole months till the end date
- For the last month use fractional days, if any remaining

**For the example:**

**Fractional days in first month**= 15/28**Whole number of months**= 5 (Mar, Apr, May, June, Jul)**Fractional days in last month**= 14/31**Proration**= 15/28 + 5 + 14/31 = 5.987327189**Price**= $120/12 * 5.98 = $59.87

Leap-year consideration

leap year consideration applies to calculation in 1 and 3 above only

# Month-Based

Treats each month the same, no matter how many days there are in the month and all fractional calculations are applied to the final month of the calculation.

- Count the number of months starting from the start date
- For the last month use fractional days, if any remaining

**For example:**

- 6
- 0

**Proration** = 6

**Price** = $120 / 12 * 6 = $60

Leap-year consideration

leap year consideration applies to calculation in #2 only.

Updated 3 months ago