Billing Management: #2 Fair way of Billing- Prorated Billing
Hello,
From speaking about the traditional ways of billing in the previous post, we are moving into the deep sea of billing. We are now in a zone to break out the most complex yet, I would call it the fairest way of billing, the Prorated Billing.
Prorated Billing ensures that customers pay only for the exact portion of a service they consume. Whether they join mid-cycle, switch plans, or cancel early, proration guarantees transparency and fairness.
What is Prorated Billing?
In short, prorated billing involves splitting charges according to the length of service used within a billing cycle. Instead of charging the customer for the entire month regardless of when they sign up or amend the subscription, businesses calculate charges accurately based on time or usage. This directly enhances customer trust and satisfaction and eliminates disputes over charges.
In this post, we will understand how proration works in different industries by examining the major industry types that need/must have proration in their billing strategy.
In this post, we will understand how proration works in different industries by examining the major industry types that need/must have proration in their billing strategy.
Scenario: SaaS
A SaaS customer starts the month on the Basic plan, which costs $30/month. Midway through the billing cycle, on the 15th, they realise they need additional features and decide to upgrade to the Pro plan, which costs $60/month.
Without proration, businesses might charge the full $60 or keep them on Basic until the next cycle, which is unfair. With proration, this can be solved by splitting the bill into the part that will be used and the period that has elapsed.
In this scenario, part of the month is charged at the Basic plan cost, and the remaining is charged at the Pro plan cost.
Old Plan | New Plan |
Basic Plan: $30 | Pro Plan: $60 |
Charges per day: $30/30=$1 | Charges per day: $60/30=$2 |
No.of days remaining: 15 | No.of days to be charged: 15 |
Credits Remaining: $1x15=$15 | Amount to be charged: $2x15=$30 |
Net Payable: Amount to be charged- Credits Remaining: $30-$15= $15 | |
The Final Invoice Amount must be charged on the 15th, and the customer's subscription will be moved to the Pro Plan.
Scenario: Telecom
Imagine a customer activating a mobile plan costing $60 on the 20th of the month. The company has a standard billing cycle of 30 days. Some businesses might activate the plan for the full plan amount and allow it to be charged again on the set billing cycle. However, that's not the ideal approach.
With Proration, the days before the activation date are excluded, and charges are made only for the exact number of days used.
Plan Amount: $60
Charge per day: $60/30= $2
No.of days to be billed: 10
Final Payable Amount: $20
The Final Payable Amount will be charged on the plan activation date, and the next charge will occur after 10 days, aligning with the billing cycle.
Scenario: Streaming Service
A streaming subscriber who is active in the $120/month Premium plan decides to switch to the $60/month Standard plan after 10 days of usage in the current billing cycle.
Without proration, the customer might feel overcharged for unused Premium days. So, to balance the charges between the higher-priced plan and the lower one, credits will be added to the customer account, which can either be refunded or adjusted for the next invoice cycle.
Old Plan | New Plan |
Premium Plan: $120 | Standard Plan Cost: $60 |
Charges per day: $120/30= $4 | Charges per day: $60/30= $2 |
No.of days used: 10 | No.of days remaining: 20 |
Charges for used days: $4x10= $40 | Amount to be charged: $2x20=$40 |
Remaining Credits: $80 |
|
Net Credit: Remaining Credits- Amount to be charged for 20 days: $80-$40= $40 | |
The Net Credit will stay with the customer account and will be applied to the next invoice, or it can be refunded.
Proration Across Industries
While SaaS, Telecom and Streaming services are the most common businesses where prorated billing happens quite often, other industries need this,
Logistics Companies operate with standard shipment charges. They might need proration when the volume of the consignment changes in the middle of the cycle.
Internet Service Providers use this when there is a change in plan within the billing cycle.
Fintech and Payment Apps prorate service fees when accounts are opened or closed in the middle of the billing cycle.
Zoho Billing has the finesse to handle these contract amendments effortlessly across industry types. Whether it's a mid-cycle upgrade, a partial cancellation, or a new customer subscribing during the middle of the billing cycle, Zoho Billing ensures invoices are adjusted seamlessly. Proration can be enabled in Zoho Billing with a simple toggle, and the application automatically takes care of all the math in the backend.
Proration Billing is not a burden but a gift wrapped in a hard cover.
Offering fair charges based on usage during billing increases confidence and provides businesses with a reputation for being fair and transparent. But what about usage that happens before it hits the bill? Even with proration in place, there are scenarios where usage happens before it's billed. For instance, a customer may request an add-on, consume additional resources, or make a one-time transaction in the middle of the billing period. These often fall into the category of unbilled charges.
In the next post, we will explore how businesses manage these unbilled charges and why keeping them in check is critical for accurate billing.
Stay Tuned!
Topic Participants
Hari Hara Sudhan. S
Sticky Posts
Community Learning Series | Digest #5 — September 2020
Dear customers, We're happy to bring you the September edition of our #CommunityDigest! Keep track of your subscription KPIs right from your smartphone: Last month, we enhanced our Android mobile app to help our customers get daily updates on their business health. We got to know from a lot of customers that this has made their job much more easier because they no longer have to keep a reminder to manually check on the previous day's revenue or activations. If you have not downloaded it yet, here'sCommunity Learning Series | Digest #4 - August 2020
Dear customers, We hope you're staying safe and healthy. I'm happy to bring you the fourth edition of our #CommunityDigest with some brand-new updates from us. 1. Daily Business Updates (for Android users) The Zoho Subscriptions Android app has got a cool new update: You can now get a push notification to your smartphone that lets you know how many activations and cancellations have taken place, and what's the net revenue for the previous day. The best part is, you can tell the app when exactly youCommunity Learning Series | Digest #3 - July 2020
Dear customers, We hope you're staying safe and healthy. We're glad to bring you the July edition of our #CommunityDigest. New community members can view our previous newsletters here. This time, we have two major updates and three interesting topics for you: 1. Zoho Subscriptions Developer Community Since the inception of Zoho Subscriptions, our team believed that the recurring billing platform we provide should be able to offer an extensive API library that empowers businesses to automate mostIntroducing: Community Learning Series | Digest #1 - May 2020
Dear customers, We hope you are staying safe and healthy. Helping businesses manage their customer subscriptions more efficiently has always been, and always will be, our goal at Zoho Subscriptions. We strongly believe this is possible if we grow together as a community and share what we know with each other. To nurture this shared learning experience, here is our brand-new Community Learning Series! Welcome to the first edition of our digest! Each edition of our community digest includes guides
Nederlandse Hulpbronnen
Recent Topics
How do I change (error) display messages
Hi! I would like to edit display messages like "invalid entries" and "enter a value for Nome" and so on into Italian language messages. How can I do that? Already tried on Validate on form submit. Where I am failing? Thanks in advance.Report grouping
I have added a grouping in a report but it is not working how i had expected. I wanted to group a summary on a field named Size but when i add the grouping the report is still showing me each record and making a summary at the bottom of the report. WhatRecord Overseas Transactions Along with CC charges
Hi All, We receive payments via stripe in multiple currencies and stripe takes around 2.5% fees. The amount is settled in INR into our local bank. What should be the currency of the income account used for Stripe payments? Here is a sample flow that weEasier onboarding for new users with stage descriptions
Greetings, I hope all of you are doing well. We're happy to announce a recent enhancement we've made to Bigin. You can now add descriptions to the stages in your pipeline. Previously, when creating a pipeline, you could only add stages. With this update,Pieds de page personnalisé - Document Zoho Writer
Bonjour à tous, Je rencontre un souci avec l’ajout d’un pied de page personnalisé dans un document Zoho Writer. Je souhaite insérer les informations de mon entreprise (notamment un logo + adresse) dans le pied de page. Le problème, c’est que lorsque j’ajouteZoho Trident Windows - Streams Not Visible
Namaste We’re having an issue with Streams not being visible in Trident (Windows), which is important for us as we share many emails internally. It appears that the feature to show Streams above the Inbox folder, as seen in the default mailbox view, isSubforms and automation
If a user updates a field how do we create an automation etc. We have a field for returned parts and i want to get an email when that field is ticked. How please as Zoho tells me no automation on subforms. The Reason- Why having waited for ever for FSMPermissions on Views
Having the option of any agent creating custom views is firing back and got a situation where there are a hundred different views across the team and tickets are not being dealt in the most efficient of ways. Tickets seems to be missed by some agents,Credit card transactions are backwards after importing statements
I am new to Zoho Books so I'm importing my firm's bank and credit card statements in. My credit card statements have a single column with negative numbers so that is the option I chose. But when I went to categorize the credit card transactions, I canAbility to Edit Ticket Subject when Splitting a Ticket
Often someone will make an additional or new request within an existing ticket that requires we split the ticket. The annoying part is that the new ticket maintains the subject of the original ticket after the split so when the new ticket email notificationimport data from Apollo.ai into zoho crm via zoho flow
I might be asking this question in the wrong forum. We use Apollo.ai to find potential new leads for our business, there are around 10000 leads that we have initially found. We have an Apollo.ai account but just to do searches, we dont use it as a crm.MS Teams for daily call operations
Hello all, Our most anticipated and crucial update is finally here! Organizations using Microsoft Teams phone system can now integrate it effectively with Zoho CRM for tasks like dialling numbers and logging calls. We are enhancing our MS Teams functionalityKnowledgebase SEO
We have a custom-domain mapped help center that is not restricted via login. I have some questions: a) will a robots.txt file still allow us to control indexing? b) do we have the ability to edit the sitemap? c) do category URLs get indexed by searchFilter contacts based on selected category in Zoho Desk ticket
Hello community, I’m setting up the Tickets module in Zoho Desk and I need help implementing the following: When a category is selected in a ticket, I want the Contact field to be filtered so that it only displays contacts that are related to that category.Adding Markdown text using Zoho Desk API into the Knowledge Base
Hi Zoho Community members, We currently maintain the documentation of out company in its website. This documentation is written in markdown text format and we would like to add it in Zoho Knowledge Base. Do you know if there is REST API functionalityVIsual maindmaps in Zoho notebook Ai
Can I create and export VIsual maindmaps in Zoho notebook Ai1stDibs Integration to Zoho Inventory
Hello is it possible to integrate my Zoho inventory and 1stDibs?Develop and publish a Zoho Recruit extension on the marketplace
Hi, I'd like to develop a new extension for Zoho Recruit. I've started to use Zoho Developers creating a Zoho CRM extension. But when I try to create a new extension here https://sigma.zoho.com/workspace/testtesttestest/apps/new I d'ont see the option of Zoho Recruit (only CRM, Desk, Projects...). I do see extensions for Zoho Recruit in the marketplace. How would I go about to create one if the option is not available in sigma ? Cheers, Rémi.Can a default task Priority be set?
The "Priority" field in the Task layout does not allow a default to be set. Is there another way of doing it? Because the current default is "None" and the Zoho Kanban board design has selected this field as critical information to surface by includingCommunity Question: Renewal vs Invoicing
This is a question for the community. Does anyone else consider there to be a difference between a subscription renewal event and sending out a recurring invoice for a subscription? For example, let's say customer XYZ purchases a 1-year subscription toScheduled Reports - Do not send empty report
Hello, We are intensively using reports in the CRM, especially for sales managers. When data is empty, they still receive an email. Can you add an option to avoid sending the report when data is empty?Improved Contact Sync flow in Google Integration with Zoho CRM
Hello Everyone, Your contact sync in Google integration just got revamped! We have redesigned the sync process to give users more control over what data flows into Google and ensure that this data flows effortlessly between Zoho CRM and Google. With thisAutomatic Matching from Bank Statements / Feeds
Is it possible to have transactions from a feed or bank statement automatically match when certain criteria are met? My use case, which is pretty broadly applicable, is e-commerce transactions for merchant services accounts (clearing accounts). In theseIs Zoho One Desktop more secure than Zoho One Web SaaS?
Is Zoho One Desktop more secure than using Zoho One in browser? Inherently, it seems desktop would be unless you don't do things like share your pw or leave pc on. I am concerned about data being on the cloud or someone else's server and database.Reminder Settings - Time Tracker
On the time tracker in Reminder Settings I created a reminder according to the Zoho manual. But a manager asked me to change the message that goes in the email. Is it possible to change the message? I didn't find that in the Zoho manual. Another question: I configured to receive the reminder everyone who logged in less than 40 hours. Does Zoho consider less than 40 hours of the current week or the whole month? Another situation, I put it so that I and another specific user would receive the notification,Why hybrid project management might be the best fit for you?
Project management techniques are designed to equip teams with proven methods for easy and efficient project execution. While management teams may have apprehensions about adopting the hybrid method of project management, we’ve compiled the top reasonsMain difference of Zoho Recruit Corporte version and Staffing HR vesion
Hi Zoho, I need help to fully understand what is the main key point differences of Recruit Corporate version versus the Staffing HR version? We are currently using Corporate HR version and we are looking on having an insightful automated reporting, doesIF Statement in Zoho CRM Formula Field
Hi, I am attempting to write a formula field that will give me one result if one statement AND another statement are true, then a different value if the first statement AND a different statement are true, else 0. Stated differently: if account = destinationOut of Stock items showing in Commerce
I have over 6000 items and most are not in stock, but all items are showing up in Commerce whether they are inventory or not. What option or feature can you use to hide items in Commerce at zero or negative quantities? I currently am using Commerce forCRM gets location smart with the all new Map View: visualize records, locate records within any radius, and more
Hello all, We've introduced a new way to work with location data in Zoho CRM: the Map View. Instead of scrolling through endless lists, your records now appear as pins on a map. Built on top of the all-new address field and powered by Mappls (MapMyIndia),Support for Custom Fonts in Zoho Recruit Career Site and Candidate Portal
Dear Zoho Recruit Team, I hope you're doing well. We would like to request the ability to use custom fonts in the Zoho Recruit Career Site and Candidate Portal. Currently only the default fonts (Roboto, Lato, and Montserrat) are available. While theseIs it possible to transfer data from one related list to another within the same module ?
In the Leads module, there is an existing default Product related list that already contains data. Recently, I added a custom multi-lookup field, which created a new related list in the same Leads module. Now, I need to move the existing data from theHow to implement new online payment gateway?
Hello, Can you tell me how to proceed to implement my local payment gateway? DIBS has an open avaiable API that should be easy to implement into ZOHO BOOKS. http://tech.dibspayment.com/dibs_payment_windowCustom Footer – Zoho Writer Document
Hello everyone, I’m having an issue adding a custom footer in a Zoho Writer document. I would like to insert my company information (including a logo + address) in the footer. The problem is that when I add these elements, the main content of my pagesHow to use MAIL without Dashboard?
Whenever I open Mail, it opens Dashboard. This makes Mail area very small and also I cannot manage Folders (like delete/rename) etc. I want to know if there is any way to open only Mail apps and not the Dashboard.Formula working in MS Excel , is not working in Zoho Sheets, Filter fuction which is working in MS sheets per the attached workbook / Daily update.
Filter function , which is working in MS Excel is not working in Zoho sheets. Please help on function of filter of particular class sheets and extract students name who has more than 3.5 hours of study hours on particular day depending on date in D7 cell.New in Smart Prompt: Record Assistant for contextual assistance, and support for new AI models
Smart Prompt helps teams stay informed and move faster by providing relevant suggestions where work happens in CRM. With this update, Smart Prompt becomes more adaptable to your organization’s AI preferences. You can now choose which Large Language ModelImproved Integration Failure Information (And Notification Options)
Hi, When an attachment service for example fails, you just get "Field x - Error", I can check the field it is failing on and find nothing wrong, same file size, type, dimensions, etc. so more information as to the actual issue would be helpful. And anCreate static subforms in Zoho CRM: streamline data entry with pre-defined values
Last modified on (9 July, 2025): This feature was available in early access and is currently being rolled out to customers in phases. Currently available for users in the the AU, CA, and SA DCs. It will be enabled for the remaining DCs in the next coupleZoho Learn and Zoho CRM integration
I would like to see an integration between Zoho Learn and Zoho CRM. 1. To be able to add articles in a related list in all modules 2. Zia to suggest related articles in a Deal or Case or Lead 3. Ability to read / search articles during a call / followNext Page