Proration means charging or refunding only the share of a period that was actually used. You work out a rate for a smaller unit, usually a day, and multiply it by the days used or left. The common methods differ in how they count a day: the actual days in that month, a standard 30-day month, or a 365-day year. Each gives slightly different cents, so the method should be written into the agreement. Stripe prorates subscription changes to the second by default, and a plan can also be prorated by payments or months instead of days.
What does proration mean?
Charging or refunding part of a price in proportion to the time used. If a customer starts partway through a month, or leaves partway through a term, proration works out the share they owe or the share they get back.
The formula is the same every time: the price for the period, divided by the units in the period, multiplied by the units used.
What are the common methods?
Three ways to count a day, all methods rather than rules. Pick one and write it into the agreement.
- Actual days in the month. The monthly price divided by 28, 29, 30 or 31, depending on the month.
- 30-day month. Every month counts as 30 days, so the daily rate never changes.
- 365-day year. The yearly price divided by 365, so every day of the year costs the same.
How much do the methods differ?
A worked example: a $300 monthly service that starts on 20 October. It covers 20 to 31 October, which is 12 days.
| Method | Daily rate | 12 days |
|---|---|---|
| Actual days (October has 31) | $300 ÷ 31 = $9.677… | $116.13 |
| 30-day month | $300 ÷ 30 = $10.00 | $120.00 |
| 365-day year | $3,600 ÷ 365 = $9.863… | $118.36 |
The gap is a few dollars here. Across many customers or larger prices it adds up, which is why the method belongs in the terms.
How do you prorate a refund?
The same way, counting the unused part. A worked example: a customer pays $6,000 up front for a service running 1 January to 31 December 2027 and cancels effective 30 April.
| Method | Used | Refund |
|---|---|---|
| By months | 4 of 12 months = $2,000.00 | $4,000.00 |
| By days | 120 of 365 days = $1,972.60 | $4,027.40 |
January to April 2027 is 31 + 28 + 31 + 30 = 120 days. $6,000 × 120 ÷ 365 = $1,972.60.
Can you prorate by payments instead of days?
Yes. On a plan, the agreement can tie what is owed to the payment periods instead of calendar days. A worked example: a $6,000, 12-month service paid as 12 monthly payments of $500. A customer who leaves after the fourth month has paid $2,000 for four months used, so under a by-month rule nothing is owed and nothing is refunded. Whatever the rule, it has to be in the agreement before the plan starts.
How does Stripe prorate subscriptions?
Stripe's documentation says:
- To the second. By default Stripe calculates prorations down to the second.
- Credit and debit. Its example: a customer moving from a $10 monthly plan to a $20 plan halfway through the period gets a $5 credit for unused time and a $10 charge for the remaining time, so pays $5 more.
- Not immediate by default. The default setting creates proration items, which are invoiced immediately only under certain conditions. Negative prorations aren't refunded automatically, and positive ones aren't billed straight away, though both can be done manually.
- Can be turned off. Setting proration to none on a change bills the full new price on the next invoice.
These apply to Stripe subscriptions, not to an installment plan with a fixed total.
Every figure on this page was checked against these sources on Oct 6, 2026. General information, not legal or tax advice.