Profile picture of Jim Miller

Jim Miller

Chief Executive Officer at ProductionNext, Inc.

Suppose you're running a service that charges its users $10 a month. Now, suppose that a user joins on June 15th. It seems like there are two possibilities for how to handle his billing:

(1) Give him a billing date of the 15th of this (and every other) month: You immediately bill him for $10 on June 15, and then again on July 15, August 15, etc.

(2) Give him, and all your users, a billing date of the 1st of the month, and pro-rate his initial payment: You bill him $5 on June 15, and then $10 on July 1, August 1, and so on.

Does anyone have any experience, and recommendations, with these alternatives? I've seen this done both ways; the prorated approach seems a little more complicated at start but then easier(?) later, but I kinda like the idea of distributing your payments throughout the month so you maybe have a better ongoing read of customer maintenance. But I don't know, really -- any advice out there?