How do prorated charges work?

Learn everything about the prorated charges and billing system at Insightful

Maja Rajic Milivojevic avatar
Written by Maja Rajic Milivojevic
Updated over a week ago

In case you've had changes in the number of employee licenses during a monthly billing cycle, the amount on your invoice for the next billing cycle will reflect those changes: For the newly activated licenses you will be debited and for the deactivated licenses you will be credited accordingly.

When calculating the prorated charges and the needed adjustment to the amount on the invoice for your next billing cycle, Insightful takes into account:

  • the number of licenses you have at the end of your current billing cycle,

  • the specific period of time during which you have used licenses that were subject to changes in your current billing cycle.

Prorated charges calculation

Let's look at an example:
Acme Company has 10 employee licenses on the Productivity management price plan. On their first invoice they pay 10 * $8 = $80 (USD).
Halfway through that cycle, they activate 3 more employee licenses. Then, with 6 days left before the next billing date (and therefore with 20% of the current monthly billing cycle still left), they deactivate 2 employee licenses.
The invoice for their next monthly billing cycle Acme Company will reflect:

  • 11 employee licenses (they started with 10 then activated 3 and then deactivated 2 employee licenses so they ended up with a total of 11 active licenses they have at the end of their current billing cycle and will be using in their next billing cycle).

    • This is: 11 * $8 = $88 (USD)

  • Debit equal to 50% of the monthly price for the 3 employee licenses they have used for 50% of their current billing cycle (as these were added halfway through the cycle).

    • This is: 50% * 3 * $8 = $12 (USD)

  • Credit for 20% of the monthly price for the 2 employee licenses they have used for 80% of their current billing cycle (as these were deactivated 6 days before the end of the cycle).

    • This is: 20% * 2 * $8 = $3.2 (USD)

So, the final amount on the invoice of Acme Company for their next billing cycle is:

$88 + $12 - $3.2 = $96.8 (USD)

Each change in the number of employee licenses is visible on your invoice break-down as separate line items for easier reference.

For clients on annual billing cycle, in case you upgrade your plan or add more employee licenses than what you started with during your annual contract, you will be billed for this expansion once the amount exceeds $200. For more on how pro-rated billing works with adding and removing employees for annual subscriptions, click here.

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