Why a prorated graduated charge can be lower than the days active suggest

When a prorated graduated charge has units removed partway through the billing period, the charge is usually lower than a day-counting estimate suggests, and it can fall to zero. This is expected. Lago does not charge a flat per-day rate for the days a unit was active. It computes a time-weighted average unit count across the whole billing period, then prices that averaged quantity through the graduated tiers. Because the averaged count is spread over the full period rather than just the active days, reading the charge off the calendar overstates it.

How the weighted average works

For a prorated recurring charge, each unit is weighted by the fraction of the billing period it was active. A unit present for the whole period counts as one full unit. A unit present for only part of the period counts as a fraction. Per the documentation, one unit at a $10 rate active for 22 of the period's days bills at $7.33, not the full $10.

The key consequence is that the weighting is against the entire period, not the days the unit existed. Two units removed early in a 30-day month do not produce "rate times days active." They produce a small fractional unit count: two units active for about 2 of 30 days is a time-weighted average of roughly 0.133 units. At a 150 USD per-unit rate, that is about 20 USD. A per-day reading of the same situation (three calendar days at the unit rate, so 30 USD) comes out higher because it counts whole units for whole days rather than the averaged fraction.

How the weighted average can change which tier applies

The graduated tiers, including any free tier, are applied to the weighted average unit count, not to the peak number of units the customer ever had. This is what makes a line item sometimes show zero.

Take a free tier of the first 2 units, with the customer one unit above it (3 total) and that extra unit removed early in the month. The single extra unit, active for about 2 of 30 days, pulls the time-weighted average to roughly 1.13 units. Since 1.13 is below the 2-unit free-tier threshold, the entire charge falls inside the free tier and the line is 0. It is not that there was no usage in the first days. It is that proration averages the usage down to a quantity that sits under the free tier.

This article reflects guidance drawn from customer case resolutions. It is not officially supported documentation and may not apply to all situations.