Answer these questions to calculate your charges when adding a new plan or feature between bill cycles. Next we’ll work through each part using an example.
- What’s the daily cost of your old and new plan or feature?
- How many days was each plan or feature active? Once you know how much a plan or feature costs per day, and how many days it was active, you can calculate prorated charges and credits.
Here’s an example that ties the calculations together. Say you switched from a $45 monthly plan to a new $60 rate plan, and you made the change 10 days into your current bill cycle.
- Calculate the daily rate of your old and new plan. Since bill cycles are set at 30 days, always divide by 30, regardless of the calendar month.
- Old plan: $45 / 30 days = $1.5 daily rate
- New plan: $60 / 30 days = $2 daily rate
- Calculate the partial charge for new plan. Multiply the daily rate by the number of days your new plan was active. If you changed plans ten days into your bill cycle, it means your new plan was active for 20 days.
- 20 days with new plan: 20 * $2 daily rate = $40 prorated charge for new plan
- Calculate partial credit or charge for old plan, and pull it all together. Most customers are billed in advance for monthly recurring charges, but some accounts are billed after the fact, which is known as being billed in arrears.
- If you’re billed in advance (most customers): Since you already paid $45 for the full month of your old plan, we’ll apply a credit for the days you weren’t using it. In this example, your old plan was only active for 10 days, so we’ll give you a credit for the remaining 20 days: $1.5 daily rate * 20 days = $30 credit.
In summary, after this rate plan change your next bill would have one credit and two charges:
- One prorated credit for your old plan: -$30
- One full month of charges billed in advance for new plan: +$60
- And a partial charge for the days that your new plan was active prior to the next bill cycle: +$40
- If you’re billed in arrears, then you’ll have two partial charges based on the amount of time each plan was active during the bill cycle. In this example, you’d see a $40 charge for the 20 days you used your new plan and $15 for the days you used your old plan.