You may have heard of the term “pro rata” charges. These charges are one of the most commonly used terms in telecommunications billing, which can be frustrating as the charges are rarely explained. However, over the years I’ve developed a mental shortcut that I use when thinking about these charges:
Pro rata charges are when a service charges for anything other than the standard (usually monthly) recurring fees.
But what does that mean?
Let’s say you connect an internet service that is costs $100.00, and your billing cycle resets on the 1st of each month. So, every month you would expect to pay $100.00. Except on the first month, when your internet service was connected, it was only connected halfway through on the 16th, why should you have to pay for the half month when the internet wasn’t even connected?
That’s where pro rata charges are useful. If your service was only connected halfway through the month, you will only get charged half a month (so, in my example, $50.00) instead of the full months cost.
When should I expect to run into pro rata charges?
Common places you might expect to see pro rata charges:
- When you are connecting a new service.
- To move newly connected services to the correct billing cycle.
- When you change a plan partway through a billing cycle.
- You will be charged part of the month for your old plan, and the rest of the month at your new plan’s rates.
- When you add a new feature to an existing service.
- To move new features to the same billing cycle as their parent service.
- When a change of account ownership occurs.
- Pro rata charges and credits are used to ensure that both old and new owners are only charged for the period in which they owned the account.
- When you disconnect a service (in which case you may even see a pro-rata credit, where you get refunded for the part of the month the service is not active).
- If you’ve paid for a service in advance, pro rata credits will be generated to refund the days that the service wasn’t connected.
Still a bit confused?
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