How a mid-cycle subscription upgrade is prorated and invoiced

When a customer moves to a new plan mid-billing-cycle, Lago prorates the new plan's subscription fee based on the days remaining in the current billing period. The renewal date and what happens to the old subscription depend on the billing type and how the upgrade is performed.

How proration works

Lago calculates the prorated charge as days remaining in the period, divided by total days in the period, multiplied by the plan's monthly fee. For example, a customer who starts a new $29/month plan on day 9 of a 30-day period is charged about $21.27 for the rest of that period (22 / 30 x $29), before tax.

Renewal date and the old subscription

For calendar billing, the renewal date is always anchored to the first of the month regardless of when the new plan was activated. A subscription activated April 9 renews May 1. For anniversary billing, a new subscription created mid-cycle anchors to its own creation date, so a subscription created April 9 renews May 9, and the anchor does not carry over from the previous plan — but only when a different external_id is used. If the same external_id is used, Lago treats the request as an upgrade and preserves the original anniversary date.

The termination behavior depends on how the upgrade is performed. If you use the same external_id, Lago automatically handles the transition and you do not need to explicitly terminate the old subscription first. If you use a different external_id, Lago creates a separate subscription and does not automatically terminate the old one; both run concurrently until the old one is explicitly terminated, which may generate a final invoice or credit note. For pay-in-advance plans, terminating issues a credit note for unused days only if a prior invoice exists for that subscription. A backdated subscription that never generated an advance invoice won't produce a credit note. The day of termination counts as used, and the credit covers the days after that.

If you want to avoid proration

Proration on plan activation is expected behavior. To charge the full monthly fee from a specific date instead, terminate the current subscription and create a new one on the desired plan starting today. This sets a clean billing anchor and charges the full fee from day one.

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