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How to Manage Upgrade/Downgrade of Product or Subscription Level

PayKickstart offers a few different options when handling the ability to Upgrade or Downgrade of a customer(s) from one Product/Subscription Level to another.

Additional Notes: 

  • Credit Remaining (At the time of the transaction) will show on the customer’s invoice if applicable.
  • Related Subscription transactions will also show credits applied and used if applicable

Subscription upgrade logic calculation:

Full explanation of how the up/downgrade logic works.

Basic Tenets:

1. We do not change the next charge date for the pro-rata period, as this has proven to be a huge problem if usage-based billing is in use.
– If there’s no pro-rata period remaining, the new subscription is charged and the next date is calculated based on the new subscription’s rules
– Trial periods are never considered in pro-rata calculations (i.e. in case of trial pro-rata = 0)

2. We issue a CREDIT or a CHARGE during the upgrade process depending on the remaining *value* of the current subscription vs the new subscription.

Process example:

1. The value of each subscription is calculated as the monetary value of that subscription per day (VPD). For example:
1.1 Old Subscription: $60 every 30 days: VPD = $2.00
1.2. New subscription: $180 for 365 days: VPD = $0.49

2. Since trial periods are ignored during a subscription change, we must calculate the number of days remaining based on the current subscription frequency and the number of “days used” since the last charge. Let’s assume for the example that 5 days after the last charge the customer upgrades, so days remaining = 25 days

3. We then calculate the value of those days remaining for the old subscription and the new subscription:
3.1 Old Subscription value until next charge date: $2 * 25 = 50
3.2 New Subscription value until next charge date: $0.49 * 25 = 12.25

In this scenario, the customer has already paid $60 from the old subscription (remaining value of $50), and only needs to pay $12.25 to pay for the new subscription’s pro-rata period of 25 days.

4. Therefore, $0 is charged, and a credit of $37.75 ($50 – 12.25) is passed to the new subscription, to be deducted from subsequent rebills until the credit is fully consumed. The first “365 day” rebill of $180 will occur in 25 days (again, we do not change the next charge date due to significant issues with doing this when dealing with usage-based billing).

5. It’s clear that if the VPD of the new subscription is higher than the VPD of the old subscription, then a CHARGE for the pro-rata period will be issued immediately, instead of a credit. Also note that any existing credits on the old subscription will be used in this pro-rata charge, should it occur.

Updated on August 11, 2022

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