Prorated charges for license-based subscriptions

This scenario will describe how prorated charges are calculated and shown in the reconciliation file by Microsoft and the AppXite Platform. 

Summary:

1. Microsoft includes a charge line in the reconciliation file for each different quantity of licenses used for # of days.
2. Microsoft recalculates the Unit Price for prorated charges based on # of days licenses were used.
3. Microsoft calculates the Amount and Subtotal columns based on the full Unit Price (no rounding applied on the Unit Price).
4. The Unit Price shown in the reconciliation file is with two digits after the comma (the remaining digits after the comma are cut off).
5. As arithmetic calculation does not coincide between multiple of Unit Price and Quantity and sum in the Amount and Subtotal columns, that can lead to extra questions from partners about data accuracy.
6. Reconciliation data from Microsoft cannot be automatically imported into most ERP systems that, by default setting calculate the invoice amount by multiplying the Unit Price by Quantity.
7. AppXite Platform reconciliation file includes one charge line for the cycle fee and one aggregated charge line for prorated charges.

Scenario: 

The customer has purchased Office 365 E1 licenses on 16.09.2020. Based on the purchase date, 16 will become a subscription-level billing cycle. 

During the subscription lifecycle customer makes multiple changes: 

• On 16.03.2021. Adds 5 licenses.
• On 12.04.2021. Reduces license count by 495.

After both actions customer in the end has 5 licenses. 

Microsoft, for these changes, will issue a reconciliation file that will contain such lines: 

For example, to calculate charges in line 2, Microsoft uses such a method: In the period from 16.03.2021. Until 11.04.2021 customer had 500 licenses for 27 days. Unit Price is then calculated by dividing the Unit price in the Microsoft pricelist with # of days in the month and multiplying by # days in use, i.e., 51.93 / 31 * 27 = 45.22935484 EUR.

The same logic applies for license quantity 5, where 51.93 / 31 * 4 = 6.7 EUR.

At the current moment calculation method is not documented by Microsoft in the CSP documentation and thus can cause uncertainty for partners receiving invoices.

AppXite Platform's billing engine manages calculations differently and ensures that overall amounts match. 

As can be seen, AppXite Platform ensures that pro-rated charges are aggregated and shown in user user-friendly manner, and data can be used for upload into ERP systems.