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Prorate based on Months not days

ankit__123__
Explorer
0 Kudos
157

Hi team, 
we have a requirement in which prorate should be calculated as per months not days.
is it possible to calculate depending on the months?

valid from 1st March to 31st Dec 
Billing reference date is 1st Jan
Yearly billing cycle
Price for year = 1200
prorate calculation on months (1200/12)*10 = 1000
prorate calculation on days (1200/365)*306 = 1006.02
SAP Subscription Billing 
thanks
Ankit

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CarstenJ
Product and Topic Expert
Product and Topic Expert
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Hi Ankit,

in SAP Subscription Billing, proration calculations are based on the number of days rather than the number of months. Currently, there isn't an option to define proration specifically by months.

To better understand your requirements, could you clarify whether your subscription changes are strictly calendar-based and only occur at the end of each month? If changes can happen mid-month, such as on June 10th in your given example, how would you expect June to be prorated?

As an alternative, you might consider setting a monthly billing cycle and using the feature to bill multiple cycles together. This approach allows you to achieve an upfront payment, such as for a year, by invoicing 12 times the monthly fee. If your subscription has a predefined validity period from March to December, this setup would result in billing 10 monthly fees.

Best regards,
Carsten

ankit__123__
Explorer
0 Kudos

Hi Carsten,
what if I use duration calculation to calculate months and then apply price accordingly.
for example : from duration calculation I get the active duration of subscription, then I divide it by 12 (use case is of yearly billing cycle), then multiple the output by price.
this way I am applying price(prorate) based on months.
thanks,
Ankit

CarstenJ
Product and Topic Expert
Product and Topic Expert
0 Kudos

Hi Ankit,
indeed this is a very good idea and can be achieved with 3 steps:

CarstenJ_4-1737464833057.png


1. You can use the duration component to calculate the number of full months during proration using the rating period start and end with the billing cycle start date as reference date. In order to calculate it in months you can specify the unit of measure as 'Month', with Rounding Rule 'Round to the Nearest' and an Increment of 1 month.

CarstenJ_0-1737464094795.png

Remark: these date fields are standard fields as described in pricing configuration guide.

2. Then you convert the duration into a ratio together with a division by 12.

CarstenJ_1-1737464338185.png

3. And finally apply this as proration factor in the Calculate function:

CarstenJ_3-1737464626872.png

Remark: you need to ensure that subscription changes and cancellation are then only at month end (or at monthly anniversary days if it is an anniversary subscription). 

Best,
Carsten