When a user decides to upgrade or downgrade their TimelyBills subscription, both the App Store and Play Store utilize a prorated billing mechanism. Prorated billing ensures that users are only charged for the portion of the service they actually use, making it a fair and transparent way to adjust subscription payments.
Let's illustrate how prorated billing works with an example: Imagine TimelyBills offers two premium subscriptions:
Pro Subscription: $5 per month
Pro Plus Subscription: $29 per year
Scenario :Upgrade from Pro Subscription to Pro Plus Subscription
Now, let's consider Alice, a user who currently subscribes to the Pro Monthly Subscription, priced at $5 per month, and her billing cycle starts on the 1st of each month. On the 15th day of her billing cycle, which is halfway through the month, Alice decides to upgrade to the Pro Yearly Subscription Plan.Here's a step-by-step breakdown of how prorated billing is applied in this scenario:
1. Pro Monthly Subscription (Jan 1 - Jan 15): Alice had the Pro Monthly Subscription for 15 days of her billing cycle. While the regular monthly cost is $5, she will only be charged for the days she used it, which amounts to (15/30) * $5 = $2.50.
2. Pro Yearly Subscription Plan (Jan 16 - Rest of the year): Alice upgraded to the Pro Plus Plan on the 16th of the month, and there is a remaining balance of $2.50 from her previous subscription. With the upgraded plan, the App or Play Store will automatically apply this remaining balance. For instance, if the $2.50 is fully used by the new subscription plan on the 21st day of the month, the App/Play Store will then charge the yearly cost for the new subscription. From that point onward, Alice's billing cycle for the new plan will commence.
Scenario :Downgrade from Pro Plus to Pro Subscription
Now, let's consider Alice, a user who currently subscribes to the Pro Yearly Subscription Plan, priced at $29 per year. Her subscription started on January 1st. On the 15th of the year, Alice decides to downgrade to the Pro Monthly Subscription.Here's a step-by-step breakdown of how prorated billing is applied in this scenario:
1. Pro Yearly Subscription (Jan 1 - end of year): Alice has been on the Pro Yearly Subscription for 15 days of her yearly billing cycle, which costs $29 for the whole year. To determine the prorated cost for these 15 days, we calculate (15/365) * $29 ≈ $1.19.
2. Pro Monthly Subscription (Jan 16 - Rest of the month): Alice downgraded to the Pro Monthly Subscription on the 16th of the year, and there is a remaining balance of approximately $1.19 from her previous yearly subscription. This remaining balance will be applied to her new monthly subscription. For example, if she fully utilizes this balance within the month, her subscription will renew at the regular monthly rate starting from the following month.
In summary, prorated billing ensures that users are billed fairly when downgrading their TimelyBills subscription. It takes into account the portion of the old subscription used and applies any remaining balance to the new plan, resulting in a seamless transition with transparent and accurate billing.