How is the Price Calculated with Prorata?
When Prorata is enabled, prices are calculated based on the exact number of days in each month. For example, if a month has fewer than 31 days (like February), the daily rate is adjusted. Here’s how it works:
- The price is broken down by the number of days in the month.
- Any remaining days from the previous or next month are included.
- For consistency, months with 29-31 days are treated as full months.
Prorata Price Calculation Formula:
Important: If there is already an existing service, when pro rata is enabled, the period evens out over 1-2 invoices, depending on when the pro rata was enabled—whether it was after or before the renewal invoice was generated.
If the client cancels the service, even though pro rata is enabled, the process is standard: if canceled at the end of the billing period, the service ends on the due date; if canceled immediately, it terminates right away when it is terminated.
Examples:
Example 1:
- Subnet price: $60
- Order placed: February 21st
- Prorata applies from day 10.
February Calculation:
- $60 ÷ 28 days (February) = $2.14 per day
- Remaining 7 days of February: 7 × $2.14 = $15
March Calculation:
- $60 ÷ 31 days (March) = $1.94 per day
- First 10 days of March: 10 × $1.94 = $19.35
Total Cost:
- $15 (for February) + $19.35 (for March) = $34.35
Example 2:
- Subnet price: $60
- Order placed: February 21st
- Prorata starts on day 22.
In this case, since Prorata begins on the 22nd, the whole of February is considered, and the total order amount remains $60.
How to enable Prorata?
To enable Prorata, please contact our Customer Success Specialist via the help.ixpo.com.