Hi,

I've been figuring a way to bill customers. I stumbled across the word "prorate" and could never find a decent definition or explanation on how it works.

Could someone help me with this?

Thanks
Joe

http://www.dictionary.com/cgi-bin/dict.pl?term=prorate&r=67

To supplement the dictionary definition, prorating in this business is dividing up the cost by fraction of time.

For example, if I decide to refund a client using a prorated method, I would refund the same fraction of the cost as the fraction of time used.

e.g.: client paid for 1 month and used for 15 days (about 1/2 month), I refund half the cost

or client paid for 1 month and used 10 days (about 1/3 month), I refund all but a third of the cost.

I used months as an example, but in this business you would probably use it for a yearly payment.

HTH

Hi,

Hmmm.. Thanks for the reply but I still don't have any idea on how it works.

Let's say someone bought a webhosting package from me on the 5th of May. How much would he be charged if I opted for the prorated billing method?

Thanks
Joe

Originally posted by joethong
Hi,

Hmmm.. Thanks for the reply but I still don't have any idea on how it works.

Let's say someone bought a webhosting package from me on the 5th of May. How much would he be charged if I opted for the prorated billing method?

Thanks
Joe


He'll be charged for the 27 remaining days (from 5th to the 31st).
((31-5)+1) / 31 x monthly cost

Afterwards, you'll charge the full month (June...)

Now this make sense. Thank you very much taz0 and Lurleene!

Joe