Changes to your subscription plan, such as upgrading or downgrading, can sometimes result in prorated charges. Prorations occur when the price of your subscription changes during a billing period. This adjustment ensures that you are charged accurately for the time spent on each subscription option. Let's take a closer look at how prorations work:
Example Scenario: Suppose you decide to upgrade your subscription from a 10 USD per month plan to a 20 USD per month plan. The change occurs halfway through your billing period, which is typically a month. In this case, you would be billed prorated amounts to account for the transition.
Unused time on the initial price: Since you have only used half of the billing period with the initial plan, you will be credited with the unused time. In our example, this amounts to 5 USD (half of the 10 USD monthly price).
Remaining time on the new price: You will then be charged for the remaining time on the upgraded plan. Continuing with our example, this amounts to 10 USD (half of the 20 USD monthly price).
By combining these charges, your total prorated charge would be 5 USD (credit) - 10 USD (charge) = -5 USD.
Understanding prorations and their impact on subscription changes is essential to ensure clarity regarding billing adjustments.