We usually prorate charges and credits when customers downgrade or upgrade a subscription.
Proration can be enabled or disabled through the API or the web interface.
In the web interface, you can enable proration under Settings > Site Settings > Site Info:
For physical goods, disable the option unless required.
You can also enable/disable the proration when you are changing a subscription:
This will override the default selection made under Site Settings.
If proration is disabled through the API, it will override the default proration setting configured under Site Settings. You can only charge customers for upgrades. When performing a downgrade, Chargebee will not allow credits to be added to the subscription.
Chargebee uses the number of days in the current billing cycle to determine the price/day.
Let us look at a few examples where we would need to use proration.
Current Plan: $60/Month
Current Billing Period: 1 Apr 2012 to 1 May 2012
Downgraded On: 21 Apr 2012
New Plan: $30/Month
Service Used: 20 days
Amount for Period Used: $40
Prorated Amount: $20 ($60 - $40)
Amount for the remaining 10 days in the current billing period: $10 (10 days x $1/day)
$10 ($20 - $10) downgrade minus the remaining days can be added as credit to his subscription and on 1st May, the customer will be charged $20 ($30 - $10) for the new plan, and $30 on the next billing cycle.
Current Plan Quantity: 3
Cost per Quantity: $30
Current Total Cost: $90
Current Billing Period: 1 April 2013 to 1 May 2013
Downgraded On: 10 Apr 2013
Current Quantity Used for: 10 days
New Plan Quantity: 2
Amount for Period Used: $30
Prorated Amount: $60 ($90-$30)
Amount to be charged for the remaining 20 days for 2 units is $40
Since the prorated amount is $60 and they need to be charged only $40, on renewal, a $40 credit will be applied and a $20 credit will remain as balance credits. The balance credit amount will be applied on the next renewal.
So how the downgrade happens when the plan quantity is changed is, the original quantity is removed and updated with the new quantity. The amount for the new quantity is calculated based on the unit plan cost and the remaining period of the current billing cycle. The prorated amount is calculated based on the period used and the original quantity.
Current Plan: $40/Month
Current Billing Period: 1 Mar 2012 to 1 Apr 2012
Upgraded On: 13 Mar 2012
New Plan: $60/Month
Service Used: 12 days
Amount for Period Used: $15.48 ($1.29/day x 12 days)
Remainder Amount: $24.51 (18 days unused x $1.29/day or $40 - $15.48)
Prorated Amount: $35.49 unused amount from the old plan (New Plan - Amount for unused period: $60 - $24.51)
Customer will be charged $35.49 for the new plan on 13th March and $60 on the next billing.
A subscription's billing period will not change during downgrades or upgrades to different plans. It only changes if the new plan's duration is different (e.g monthly to a quarterly or yearly plan etc).
Charges can be reversed for prorated amounts in 2 ways: