Billing Management: #2 Fair way of Billing- Prorated Billing

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.

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.
​
Notes
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! 


    • 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's

    • Community 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 you

    • Community 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 most

    • Introducing: 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

      • Prefill form with CRM/Campaigns

        I created a form in zForms and created prefill fields. I added this to the CRM and selected the fields so when sending from the CRM, the form works great. However, I want to use the same form in Campaigns and I want it to pull the data from CRM (which

      • Notes badge as a quick action in the list view

        Hello all, We are introducing the Notes badge in the list view of all modules as a quick action you can perform for each record, in addition to the existing Activity badge. With this enhancement, users will have quick visibility into the notes associated

      • Triggering a campaign automation from a Form

        I used Forms to create a lead form that is accessed by a button on my website. The field information flows into the CRM. However, I am trying to figure out how to use Campaign automations to start a workflow (series of campaign emails) that is triggered

      • Employee Appraisal Applicability - Why is Date of Joining Hard-Coded?

        In the new (to me, at least) Performance Appraisal Cycle wizard, it's possible to set criteria to determine for whom the appraisal process should apply. This makes sense on its face. However, one MUST use the Date of Joining criterion as a filter. Why

      • Formula fields

        Zoho People now supports formula fields. This post illustrates it. Formula fields are fields whose value is calculated instead of being entered by the user. Using this, number, decimal and date manipulations can be done. The value of this field could be numeric or date depending on the output of the formula. In date manipulations, the result will be given in milliseconds, which you can format as per you need. The operators we support are +, - , *, /. Formula fields get recalculated automatically

      • Copy paste from word document deletes random spaces

        Hello Dear Zoho Team, When copying from a word document into Notebook, often I face a problem of the program deleting random spaces between words, the document become terribly faulty, eventhough it is perfect in its original source document (and without

      • Is it possible to use module field filters via URL parameters?

        It would be really convenient if I could quickly link to a filter. For reference, this is the filter functionality I'm referring to: https://help.zoho.com/portal/en/kb/crm/customize-crm-account/advanced-filters/articles/advanced-filters For example: My

      • 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 these

      • Lightbox Pop-up form

        I would like to embed my form using the lightbox pop up. I don't want it to load automatically. I want it to load when some clicks the button. I can see this option, however when I use the "show pop-up launch button" on the website, the button automatically

      • Unable to remove the “Automatically Assigned” territory from existing records

        Hello Zoho Community Team, We are currently using Territory Management in Zoho CRM and have encountered an issue with automatically assigned territories on Account records. Once any account is created the territory is assigned automatically, the Automatically

      • Data Processing Basis

        Hi, Is there a way to automate the data processing for a candidate every time an application arrives from job boards, without requiring manual intervention? That is, to automatically acquire consent for data processing. I've seen a workflow that allows

      • Lightbox Pop-up form

        I would like to embed my form using the lightbox pop up. I don't want it to load automatically. I want it to load when some clicks the button. I can see this option, however when I use the "show pop-up launch button" on the website, the button automatically

      • Zoho CRM for Everyone's NextGen UI Gets an Upgrade

        Hello Everyone We've made improvements to Zoho CRM for Everyone's Nextgen UI. These changes are the result of valuable feedback from you where we’ve focused on improving usability, providing wider screen space, and making navigation smoother so everything

      • Customer Management: #5 Never Let the Customer Slip

        When Rahul started Knight's Watch Consulting, his focus was simple: deliver good work and keep clients happy. He offered one-time consulting projects, monthly advisory retainers and usage-based support for growing clients. Business was steady, and customers

      • 10GB Email Storage Limits in Zoho CRM

        We’ve had Zoho One for almost 5 years and have always synced our emails from Gmail via IMAP… As of late, we’ve run into issues with our emails not syncing, due to being over the 10GB storage cap… What’s very odd is that we haven’t changed a thing? I know

      • Zoho Projects Android and iOS app update: Mobile device permission based on user profiles

        Hello everyone! We have brought in support for mobile device permissions based on the user profiles which are configured in organization level. Administrators can now configure the permissions on the web app(projects.zoho.com) by following the steps mentioned

      • Good news! Calendar in Zoho CRM gets a face lift

        Dear Customers, We are delighted to unveil the revamped calendar UI in Zoho CRM. With a complete visual overhaul aligned with CRM for Everyone, the calendar now offers a more intuitive and flexible scheduling experience. What’s new? Distinguish activities

      • How to import data from PDF into Zoho Sheet

        I am looking to import Consolidated Account Statement (https://www.camsonline.com/Investors/Statements/Consolidated-Account-Statement) into zoho sheet. Any help is appreciated. The pdf is received as attachment in the email, this document is password

      • Multi-currency and Products

        One of the main reasons I have gone down the Zoho route is because I need multi-currency support.  However, I find that products can only be priced in the home currency, We sell to the US and UK.  However, we maintain different price lists for each. 

      • Unlocking New Levels: Zoho Payroll's Journey in 2025

        Every year brings its own set of challenges and opportunities to rethink how payroll works across regions, regulations, and teams. In 2025, Zoho Payroll continued to evolve with one clear focus: giving businesses more flexibility, clarity, and control

      • Zoho Projects Android and iOS app update: Timesheet module is now renamed as 'Time Logs', delete option has been renamed to 'Trash'.

        Hello everyone! We have now renamed the Timesheet module as Time Logs and the delete option as 'Trash' on the Zoho Projects Android and iOS app. Time Logs Android: Time Logs iOS: Trash option Android: Trash option iOS: Please update the app to the latest

      • Zoho Mail app update: Manage profile picture, Chinese (Traditional) language support

        Hello everyone! In the latest version (v3.1.9) of the Zoho Mail app update, we have brought in support to manage profile picture. You can now set/ modify the profile picture within the app. To add a new profile picture, please follow the below steps:

      • Reminders for Article Approval

        Is there a way to send reminders for approvers to review articles and approve/deny them? I'm not seeing that option anywhere.

      • To print Multiple delivery notes in batches

        In Zoho Books, we can print a Delivery Note from an Invoice using the Print Delivery Note option, but it is non-editable and always prints all line items from the invoice. Our requirement is to deliver invoiced items in batches and print delivery notes

      • Add Full-Screen Viewing for Quartz Recordings in the Client Interface

        Hi Zoho Team, We would like to request an enhancement to the Zoho Quartz client interface when viewing submitted recordings. Current Limitation: When viewing a Quartz recording from the client (user) interface, there is currently no option to switch the

      • 2025 Recap: A Year to Remember | Zoho Inventory

      • Important Update : Pipedrive deprecated fields no longer supported in Zoho Analytics

        Dear Pipedrive users, We would like to inform you about a recent update related to your Pipedrive integration with Zoho Analytics. The Pipedrive team has deprecated certain fields from their application. You can find more details in the official Pipedrive

      • Product Updates in Zoho Workplace applications | November 2025

        Hello Workplace Community, Let’s take a look at the new features and enhancements that went live across all Workplace applications this November. Zoho Mail Format comments easily using Slash Commands With Slash commands, you can easily format text, insert

      • Right-Click Pipeline to Open in New Tab

        Please add the ability to right-click on a pipeline to open it in a new tab

      • Adjusting Physical Inventory

        Not getting very far with support on this one, they say they are going to fix it but nothings happened since November. Please give this a thumbs up if you would like to see this feature or comment if you have some insight. Use Case: Inventory set to be

      • Power up your Kiosk Studio with Real-Time Data Capture, Client Scripts & More!

        Hello Everyone, We’re thrilled to announce a powerful set of enhancements to Kiosk Studio in Zoho CRM. These new updates give you more flexibility, faster record handling, and real-time data capture, making your Kiosk flows smarter and more efficient

      • How to install Widget in inventory module

        Hi， I am trying to install a app into Sales Order Module related list, however there is no button allow me to do that. May I ask how to install widget to inventory module related list?

      • Deluge date time issue

        The deluge function info zoho.currentdate.toString("MMM/YYYY") returns Dec 2026 instead of 2025

      • Sending automated messages that appear in the ticket's conversation thread

        Good morning, esteemed Zoho Desk community, warm greetings Today I am here to raise the following problem, seeking a solution that I can implement: I need to implement an automation that allows me to send reminder messages to customers when I am waiting

      • Issue with Zoho Creator Form Full-Screen View in CRM Related List Integration

        Hi Team, We have created a custom application in Zoho Creator and integrated it into Zoho CRM as a related list under the Vendor module, which we have renamed as Consignors. Within the Creator application, there is a form named “Pickup Request.” Inside

      • Set connection link name from variable in invokeurl

        Hi, guys. How to set in parameter "connection" a variable, instead of a string. connectionLinkName = manager.get('connectionLinkName').toString(); response = invokeurl [ url :"https://www.googleapis.com/calendar/v3/freeBusy" type :POST parameters:requestParams.toString()

      • sync views to sheet

        Im looking to sync my views aka reports in analytics to zoho sheets, when data is updated in analytics it also should be updated in sheets, till now zoho sheets only offer raw data connection and it is not enough as these reports are difficult to re-do

      • How to update the Status in a custom module?

        Hi, I have a custom module "cm_payment_registry" in Billing, I am trying to change the status which is "Draft" with: array = {"custom_status":"Approved"}; zoho.billing.update("cm_payment_registry",organization.get("organization_id"), XXXXXXXXXXXXXX, array,"connectionname");

      • is it possible to add more than one Whatsapp Phone Number to be integrated to Zoho CRM?

        so I have successfully added one Whatsapp number like this from this User Interface it seems I can't add a new Whatsapp Number. I need to add a new Whatsapp Number so I can control the lead assignment if a chat sent to Whatsapp Phone Number 1 then assign

      • Replace Zoho Invoice with QuickBooks

        We are implementing Zoho FSM for a cleaning business in the US with 50+ field workers. This business has been using Quickbooks for accounting for decades and will not migrate to Zoho Books. A major issue in the integration is the US sales tax calculation.

      • Next Page