# New refund terms

How is a refund distributed if you cancel a purchase within the first 7 days?

Let’s say you buy a new Microsoft Business Standard subscription with 10 licenses (seats) on July 20 for EUR 10.08 per month unit price with a monthly term and monthly billing. Later on July 27, you cancel the subscription. The following billing line will appear on the reconciliation file for the July billing cycle that you’ll receive in August.

When you cancel a subscription within the first 7 days we prorate the refund based on the unused portion of the charge cycle. The first transaction shows the cost of the transaction if you used it throughout the month.

The monthly unit price is 10.08 EUR, translating into a daily effective unit price of 0.32 (10.08/31). However, the actual charges are calculated using the following formula based on the Effective Unit Price:

Effective Unit Price = Unit Price / the total number of days in the charge cycle

Note that the billable days in a monthly charge cycle depend on the number of days in the purchase month. For example, the billable days are 30 for June but 31 for August. The billable days in an annual charge cycle are 365 or 366 (for a leap year).

Total = Effective Unit Price * the number of billing days in the billing cycle * Billable quantity.

The second transaction shows a refund for 29 days from July 27, 2021, to August 14, 2021, and the amount in the charge cycle is (0.32 x 29 x 10) = 94.2.

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