Prorating Upgrades & Downgrades

By default, plan modifications (whether upgrades or downgrades) are prorated. This system differs from typical implementations by resetting the billing date based on when the plan change occurs, rather than preserving the original renewal schedule. This approach benefits both customers through simplified discount calculations and sellers through immediate receipt of the new plan's full value for the complete billing period.

How Proration Works

Proration from a Lifetime License

By default, we prorates plan updates (upgrades or downgrades).

Unlike the commonly used prorating implementations which preserve the renewal payment processing time, Freemius’ proration works slightly different and will restart the billing date based on the time of the plan update. This methodology simplifies understanding the discount for the customers and also benefits the sellers who will receive the initial worth of the new plan (minus the discounts) for the full billing period right away.

See below for more details on how Freemius prorates plan updates.

Proration from a Subscription (Monthly or Annual)

Customers who are updating a plan that was purchased as a subscription will receive a proration discount, based on the unused portion of their previous plan:

remaining_period = (1 - number_of_days_past_from_the_old_plan_last_payment / number_of_days_in_past_billing_cycle )

proration_discount = max(0, remaining_period x old_plan_last_payment )

Examples:

• If a user purchased a single-site monthly pro package for $10 per month and after 2 months and 15 days upgrades to the annual billing cycle of the same single-site pro plan for $100 per year - the customer will have already paid $10, and will have used half of their current billing cycle. Therefore, the initial prorated amount will be $95 ($100 - $10 / 2).
• If a user subscribed to a single-site annual pro license for $100 per year and after 3 months decides to downgrade to a single-site annual starter plan for $80 per year - the customer will already have paid $100, and have used only a quarter of the current billing cycle. Therefore, the proration discount for the remaining period will be $75, and the initial price for the single-site annual starter plan will be $5 ($80 - $75). The first renewal payment will be scheduled for a year from the downgrade date and will cost $80.

Proration from a Lifetime License

Customers who purchased a lifetime plan will be eligible for a proration discount only if they update their plan within 30 days from the time of purchase. The proration discount is calculated as follows:

proration_discount = min(prev_lifetime_payment, new_lifetime_price)

Proration with Coupons

When updating a plan with a percentage-based coupon, the proration discount will be calculated first, and the coupon discount will apply to the discounted price as the last discount.

In-Dashboard Plan Update

When a customer updates their plan within their WP Admin on a website where they’ve already activated it, the license will automatically be recognized by the checkout, and the user will be presented with the following options:

Note: Plan updates require matching account and license owners.

Checkout Plan Update

When a customer is trying to update their plan from your website, the loaded checkout will include the following label:

This option will enable the customer to enter their license key. Once the license key is verified, the purchase will be prorated as described in the proration algorithm above.

Customers updating plans via website checkout can enter their license key for verification, triggering the prorated calculation described above.