Membership Freeze Bill Proration

When a membership is unfrozen, a prorated bill will sometimes be created to bridge the gap between the unfreeze date and the day of the month (or week) that the membership normally bills on. The point of this bill is to get the membership back on track so we can resume billing on the same day of month (or week) as before the freeze.

The amount of this bill varies between $0 and the normal recurring bill amount depending on how the system calculates what the client owes / is owed before their next normal billing date. If the client owes money, that amount is charged in the prorated bill. If the client is owed money (this can happen if the membership is frozen right after paying for a full billing period, for example), the prorated bill will be $0 and the client may receive a credit/discount on their next normal bill.

How we calculate what a client owes or is owed when a freeze ends

Determining what a client owes or is owed at the end of a freeze is complex and there are many factors that need to be considered. In most cases, the following calculation is used to come to the final number.

Note: The following calculation is not always used to determine the amount a client owes or is owed at the end of a freeze. A more complex algorithm is used in certain more complex scenarios involving multiple back to back freezes (which is, in general, not a strategy we recommend) or older bills that don’t align correctly.

The following variables are used in the calculation

• Billing period length (in days)

• Billing period cost (the actual recurring bill amount, not including discounts)

• Number of active days (this is the total number of days the membership was active for in the bill before and the bill after the freeze)

The calculation then works as follows

• Cost per day = Billing period cost / Billing period length

• Days owed = Number of active days - Billing period length

• Amount owed = Days owed x Cost per day

Note: For monthly billing, we always use 30 days as the length of the month to determine “Billing period length” (so billing every 1 month would be 30 days, every 2 months would be 60 days, etc). This helps to ensure proration logic behaves consistently across months that have different numbers of days.

Here are some example scenarios to show how the calculation works in practice.

Scenario 1

• Membership bills for $150 every month on the 1st

• Freeze occurs from March 10th to April 3rd

Here are what the two bills surrounding the freeze would look like when the freeze ends

• Billing period length: 30 days

• Billing period cost: $150

• Number of active days: 9 + 28 = 37

• Cost per day = $150 / 30 days = $5 per day

• Days owed = 37 - 30 = 7 days (client has 7 days of active membership that still need to be paid for through April 30)

• Amount owed = 7 x $5 = $35 (client owes $35 to be settled up through April 30)

In this scenario, the prorated bill (services dates April 3 - April 30) would be $35.

Scenario 2

• Membership bills for $150 every month on the 1st

• Freeze occurs from March 10th to March 25th

Here are what the two bills surrounding the freeze would look like when the freeze ends

• Billing period length: 30 days

• Billing period cost: $150

• Number of active days: 9 + 7 = 16

• Cost per day = $150 / 30 days = $5 per day

• Days owed = 16 - 30 = -14 days (client has paid for 14 extra days)

• Amount owed = -14 x $5 = -$70 (client is owed $70 to be settled up through March 31)

In this scenario, the prorated bill (services dates Mar 25 - Mar 31) would be $0 and the April 1 bill would have a $70 discount/credit.