Invoice Example – Full Upgrade
Introduction
This article explains how full Upgrade invoicing works when you upgrade a Subscription to a different product. It demonstrates the billing calculations and reconciliation processes using a practical example of upgrading from Microsoft 365 Business Standard to Office 365 E1, showing how Proration applies to both the original and upgraded subscriptions.
In this article:
When you upgrade a subscription to a different product mid-cycle, the billing system applies proration to calculate refunds for the unused portion of the original subscription and charges for the upgraded subscription for the remainder of the billing cycle.
Understanding full upgrade billing
Let's examine a practical scenario to understand how full upgrade billing works.
You purchase a new Microsoft 365 Business Standard subscription with 300 licenses on June 18th for EUR 10.08/month cost price with a monthly term and monthly billing. Later, on June 25th, you upgrade the subscription to Office 365 E1 for EUR 6.43/month cost price. The following billing lines will appear on the July reconciliation file for the June billing cycle.
The billing calculations involve three key components:
Original subscription charges: The system initially bills for the full month of the Microsoft 365 Business Standard subscription as if you used it for the entire billing period from June 18th to July 17th.
Proration refund: When you upgrade on June 25th, the system calculates a refund for the unused portion of the original subscription from June 25th to July 17th (23 days).
Upgraded subscription charges: The system bills for the Office 365 E1 subscription from the upgrade date (June 25th) through the end of the billing cycle (July 17th).
Microsoft reconciliation file breakdown
The Microsoft reconciliation file displays three separate line items to show the complete billing transaction:
| Order Date | Charge Type | Unit Price | Total | Charge Start Date | Charge End Date | Effective Unit Price | Billable Quantity |
|---|---|---|---|---|---|---|---|
| 6/18/2021 | new | 10.08 | 3,024 | 6/18/2021 | 7/17/2021 | 10.08 | 300 |
| 6/25/2021 | convert | 10.08 | -2,316 | 6/25/2021 | 7/17/2021 | -7.72 | 300 |
| 6/25/2021 | convert | 6.43 | 1,476 | 6/25/2021 | 7/17/2021 | 4.92 | 300 |
The first line shows charges for the Microsoft 365 Business Standard subscription if you used it for the whole month.
The second line shows a EUR 2,316 refund of the same subscription because you haven't used it from June 25th to July 17th. The refund calculation uses the formula:
The third line shows a EUR 1,476 cost of the upgraded subscription for the remainder of the charge cycle from June 25th to July 17th. The cost calculation uses the formula:
Platform reconciliation file breakdown
The Platform consolidates these transactions into simplified billing lines:
| Charge Type | Revenue Unit Price | Revenue Total Price | Charge Start Date | Charge End Date | Cost Unit Price | Customer Quantity | Cost Total Price |
|---|---|---|---|---|---|---|---|
| Purchase Fee | 10.08 | 3,024 | 6/18/2021 | 7/17/2021 | 10.08 | 300 | 3,024 |
| Correction | -840 | -840 | 5/18/2021 | 6/17/2021 | -840 | 1 | -840 |
The first line shows charges for the Microsoft 365 Business Standard subscription if you used it for the whole month.
The second line shows a EUR 840 refund of the same subscription. This refund accounts for two components:
- The unused portion from June 25th to July 17th with a refund calculation of:
Effective Unit Price (10.08 / 30 * 23) × Billable Quantity (300) = 2,316 - The cost of the upgraded subscription for the remainder of the charge cycle from June 25th to July 17th with a cost calculation of:
Effective Unit Price (6.43 / 30 * 23) × Billable Quantity (300) = 1,476
The Platform calculates a consolidated invoice line with charge type Correction:
Summary
The article explains full upgrade invoicing by showing how proration works when upgrading a subscription mid-cycle. Using a practical example of upgrading from Microsoft 365 Business Standard to Office 365 E1, it demonstrates how the billing system calculates refunds for unused portions and charges for the upgraded subscription, displaying the differences between Microsoft and the Platfrom reconciliation file formats.
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