Proration is the process of adjusting a customer’s bill based on changes made to their subscription, such as adding or removing a service, changing the billing cycle, or updating the billing rate. It can be a good practice for subscription businesses in certain situations. Prorating ensures that customers are only charged for what they use and helps to maintain fairness and transparency in billing.
However, it can also be complicated to implement and may require additional resources to accurately calculate prorated charges. However, this can be solved by onboarding subscriptions and billing management platforms like saaslogic.
Calculation complexity is not the only problem though. Proration as a practice may suit only certain types of businesses as it may affect the overall revenue and profitability of the company.
Ultimately, whether or not proration is a good practice for a particular subscription business will depend on a number of factors, including the type of business, the customer base, and the company’s overall billing and revenue goals.