Upgrade Checkout: Prorated Billing

Overview

When a user upgrades their current subscription to a higher-tier plan before the current cycle ends, the system supports proration to ensure fair and transparent billing.

Instead of charging the full price of the new plan, we calculate the remaining value of the current plan (unused days), and deduct it from the price of the new plan. After payment, the user is granted the full new billing cycle from the upgrade date.

Why Proration Is Important

Without proration, users would be required to pay the full price of the new package regardless of how much time remains in their current plan. Proration:

• Avoids overcharging users.

• Encourages mid-cycle upgrades.

• Reflects time-based value on active plans.

Calculation Formula

RemainingDays = ExpiryDate - CurrentUTCDate

PricePerDayCurrent = CurrentPrice.Amount / TotalDaysCurrent
PricePerDayNew = NewPrice.Amount / TotalDaysNew

ProrationAmount = (PricePerDayNew - PricePerDayCurrent) × RemainingDays

Parameters

Name	Description
CurrentPrice.Amount	Total price of the current subscription plan
NewPrice.Amount	Total price of the new upgraded plan
RemainingDays	Number of unused days in the current cycle
TotalDaysCurrent	Total number of days in the current plan’s cycle
RemainingValue	The value of unused time from the current plan
ProrationAmount	The amount user must pay to upgrade immediately

Example

• Current Package: Essentials – $20/month

• Target Package: Professional – $50/month

• Remaining Days: 10

• Total Cycle Days: 30

Calculation:

PricePerDayCurrent = 20 / 30 = $0.66
PricePerDayNew     = 50 / 30 = $1.67

ProrationAmount = (1.67 - 0.66) × 10 = $0.67 × 10 = $10.10
TotalPay = 50 - 10.10 = $39.9

→ The user only will pay $39.9 upgrade immediately. The system will activate the Professional plan for 30 days from today, and the Essentials plan is canceled.

Behavior Summary

Condition	Behavior
User upgrades early	Remaining time of the current plan is converted to monetary value
A new cycle is started	30-day cycle begins from the upgrade date
Full features of new plan applied	Immediately after payment
User pays only the difference	Between new plan and remaining value of current plan

Additional Notes

• Free to Paid upgrades are not prorated. Full payment for the new package is required.

• If the current plan is nearing the end of its billing cycle (e.g., 1–2 days remaining), proration may result in a minimal charge.

• The proration logic may differ depending on subscription term (monthly, yearly) and custom business rules.

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Benefits of This Approach

• Fair and accurate billing

• Encourages users to upgrade anytime

• No wasted value from old plan

• Simple for both users and support teams to explain