At Fellow, we use proration on our invoices. That statement might prompt a few questions so we created this article to help answer some of them:
What is proration?
Proration is the process of adjusting a subscription charge based on the time that that user actually had access to the product. For example, if a new user joins halfway through your billing period, you'll only be charged the subscription price * the remaining time (or in other words, half of the normal subscription price)
The saying goes that a picture is worth a thousand words. So we created this diagram to show how prorated billing works as users are added over the course of the month.
Why does Fellow prorate?
Fellow prorates so that the final invoice accurately reflects the number of users in your workspace. However, just charging you for the total quantity of users on your workspace isn't fair. Instead, we prorate so you pay for the amount of time that those users have been using Fellow.
For example, if you have 5 users at the start of a month and add 10 users at the very end of the month. you won't be charged the full price for those 10 users - instead, I'll be charged the prorated price depending on the date that they signed into Fellow.
How does this show up on my bill?
You might see something like this on your invoice:
Essentially, this is us accounting for the change in quantity and prorating accordingly.
To break it down further, you'll notice that the line items are in pairs depending on the date. For example, Remaining time on 24 after 03 May 2021 pairs with the unused time on 23 after 03 May 2021.
This data indicates when a new user was added. The first line item is the charge for all the users for the rest of the month. The second line item, is subtracting the users that you have already been charged for. If you take the first amount and subtract the second amount you'll get $4.75 which is the cost for the added users, prorated to account for the fact that they haven't had access the entire month.
And this pattern will continue where the green value is the new quantity of users (including the users added) and the red value is the previous quantity of users before the addition.
When will I be billed for the prorations?
If you are on annual plan: you will charged for any prorations each month, on the date of your billing cycle. For example, if you started your subscription on May 15th, you'll be charged for any proration on the 15th of the other months. Note: you won't be charged for prorations unless you add users
If you are on a monthly plan: prorations will be added onto your next bill. For example, prorations for May will be included on the June bill.
If you have any questions, don't hesitate to reach out to us at email@example.com or reach out directly to your account manager.