Prorated charges for addon subscriptions

Introduction

This article explains how prorated charges are calculated and displayed for Add-on Subscriptions in Reconciliation Files by Microsoft and the Platform. It covers billing cycle alignment, charge calculations, and important considerations for understanding reconciliation data accuracy.

In this article:

• Understanding prorated charges for Add-on Subscriptions
• Example scenario
• Microsoft reconciliation file structure
• Platform charge types

Understanding prorated charges for Add-on Subscriptions

When Customers purchase Add-on Subscriptions, Microsoft aligns the billing cycle with the Parent Subscription billing cycle starting from the next Billing Cycle. This alignment affects how prorated charges are calculated and presented in Reconciliation Files.

Key points about prorated charge calculations:

• Microsoft includes a charge line in the Reconciliation File for each different Quantity of Licenses used for a specific number of days.
• Microsoft recalculates the unit price for prorated charges based on the number of days Licenses were used.
• Microsoft calculates Amount and Subtotal columns based on the full unit price without rounding.
• The unit price shown in the Reconciliation File displays two digits after the decimal point, with remaining digits truncated.

The Platform currently follows the same calculation principles as Microsoft.

Example scenario

A Customer purchases the Add-on Subscription "Microsoft 365 Audio Conferencing." The Add-on Subscription inherits the Parent Subscription billing cycle starting from the next Billing Cycle.

In this example, the Add-on Subscription is purchased on April 14, 2021, and the Parent Subscription has a Billing Cycle Day of 24. From the next month, the Cycle Fee period for the Add-on Subscription will be April 25, 2021 – May 24, 2021.

Example with corresponding Charge Start and Charge End Dates:

How charge dates impact prorated calculations

The Charge Start Date and Charge End Date impact prorated charge calculations as follows:

Line 1 (Full billing cycle): Charge Start Date and Charge End Date are April 25, 2021 – May 24, 2021, resulting in the full list price of 35.26 EUR multiplied by Quantity.

Line 2 (Prorated billing cycle): Charge Start Date and Charge End Date are April 14, 2021 – April 24, 2021. This charge is prorated to follow the Parent Subscription cycle. To determine the unit price for line 2, Microsoft divides the Add-on Subscription price by the number of days in the month, then multiplies by the number of days in use: 35.26 / 31 * 11 = 12.5116129 EUR.

Microsoft reconciliation file structure

Below are lines from the Microsoft Reconciliation File regarding the Add-on Subscription:

Platform charge types

The Platform follows the same logic as Microsoft with slight differences in charge type naming.

For an extensive overview of naming conventions between charge types, refer to the Charge-Types article.

Summary

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