How to Set Cancellation, Downgrade, and Upgrade Rules - SureCart

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How to Set Cancellation, Downgrade, and Upgrade Rules

Managing subscriptions is an important aspect of any online business, SureCart makes it easy to handle changes to subscriptions.

Subscriptions are like ongoing memberships or services that customers sign up for, and sometimes they want to change them.

They might want to upgrade or downgrade to a different plan, or even cancel altogether.

This guide will help you understand how your store manages subscription upgrades, downgrades, and cancellations. Additionally, you’ll learn how to customize the default behavior of these changes for subscriptions.

Before we dive into the subscription details, let’s master some vital subscription concepts and terminology that you might come across while selling subscriptions.

Let’s begin with the basics.

What is Prorated Billing?

Prorated billing refers to the practice of dividing costs or charges proportionally based on specific rules or ratios, ensuring fairness in financial transactions.

Everyday Example: Imagine you and a friend sharing a bag of popcorn at the movies. The bag contains 10 pieces. You munch down 6, while your friend enjoys 2. Proration steps in to ensure fairness in settling the bill. You end up covering 60% of the cost, which is $6 for the $10 bag, and your friend pays 20%, which is $2. Proration makes sure expenses align with usage, keeping things equitable.

In a Nutshell: Proration is the art of equitable division, grounded in proportions. We’ve got two Proration Methods at our disposal – Cost-Based proration and Time-Based proration.

Let’s explore both options.

Cost-Based Proration

Cost-based Proration is all about charging customers based on the difference between which plan they currently have and which plan they wish to switch to.

Real-life example: A customer initially subscribed to a Basic Annual Subscription for a music streaming service at $8 on January 1, 2022, then, on June 1, 2022, he made the decision to level up to the Premium Annual Subscription, which is priced at $12. To carry out this upgrade, they simply pay the $4 difference immediately and get their plan upgraded.

This method ensures that customers can easily move up to a higher-tier subscription without any hassle, simply paying the price difference between the plans.

Time-Based Proration

When a customer chooses to upgrade, and you’ve selected Time-Based Proration, the upgrade cost is determined by the price difference between the two options and the time left in their current subscription before it renews.

For instance, let’s continue the above scenario: The customer initially subscribed to a Basic Annual Music Streaming Plan for $8 on January 1, 2022, then, on Jun 1, 2022, they decided to switch to the Premium Plan, which is priced at $12. The price difference between both plans is $4, and the user still has 6 months remaining on their current subscription. To make the upgrade, they’ll pay only $2.

This approach allows customers to enjoy the benefits of their new plan while ensuring a fair cost calculation.

Immediate and Next Billing Period

Okay, now that we know how proration works it’s time to learn when our changes to subscription take effect, we have two options: Immediate execution or changes applied at the Next billing cycle.

Let’s explore these further.

Immediate Execution: This means that any modifications or actions you make to the subscription take effect instantly, without waiting for the next billing cycle.

For instance, if a customer upgrades their subscription from Basic to Premium with immediate execution, they gain immediate access to Premium features, and their next billing date is adjusted to reflect the new plan’s cost.

Next Billing Cycle: This approach schedules changes or actions in the subscription to commence at the beginning of the next billing cycle.

If a customer opts to upgrade from Basic to Premium with the next billing cycle option, they’ll retain Basic access until the start of their next billing period. At that point, they’ll be charged for the Premium plan and gain access to its features.

Which one is better for me?

There is no direct answer to this question, the choice between these two methods depends on several factors.

Immediate Execution: This is often preferred when you want to offer customers instant access to upgraded features or changes. It can significantly enhance the user experience. This method is best when selling services, memberships, or other virtual goods, you may want to begin charging at the new subscription’s rate immediately.

Real-life example: you’re subscribed to a music streaming service for $10 a month, and you decide to upgrade to a $ 20-month subscription. It’s clear that you’d want these changes to take effect right away, without waiting for the next billing cycle. This is where immediate execution comes in handy.

Next Billing Period: This approach is useful when you aim to maintain billing consistency and avoid pro-rated charges within a billing period. The next billing cycle is suitable for cases where you want to align changes with regular billing cycles, and immediate access isn’t a primary concern.

This method works best for subscriptions with physical items here’s what happens: Let’s say someone subscribed to receive 5 boxes of papers per month on August 15th. On September 1st, they decided to switch to an 8-box per month plan. In this case, they’ll pay for the new plan on September 15th.

In summary, the choice between immediate execution and the next billing cycle hinges on your business objectives, customer expectations, and the specific dynamics of your subscription model. When deciding which approach to implement, consider how it will impact your customers and your billing procedures.

How to Merchants Can Manage Upgrades, Downgrades, and Cancellations in SureCart

Now that we’ve covered the essential aspects of subscriptions and their use cases, it’s time to explore how SureCart manages these processes and how we can make modifications.

Upgrading, downgrading, and canceling subscriptions in SureCart can be managed from a single screen, to access this setting, navigate to SureCart > Settings > Subscription.

Here, you can adjust the settings for each subscription action. Basically, there are only two choices for each action: immediate execution and execution on the next billing period.

Let’s explore them for each action.

Downgrade Happens

A downgrade in a subscription means moving from a better plan to a basic one. You pay less to get less. For example, going from a premium streaming plan with many features to a basic plan with fewer features is a downgrade.

We have two options for downgrade, and based on our selection in the settings page users will be downgraded immediately or on the next billing period.

When a downgrade happens immediately the invoice will likely have a $0 balance and a credit may be applied to the customer, when a downgrade happens at the next billing period, the subscription won’t be downgraded until the next payment date.

Users can access to downgrade at their user dashboard, in the Plans menu, here is how it appears from the user side.

In this screenshot, we see the current plan of the user is the Pro plan and we are downgrading it to the Basic plan.

In the next step, it is stated that the switch will be implemented immediately and the user’s account will get a prorated credit that is adjusted based on the time remaining.

Upgrade Happens

An upgrade in a subscription means moving from a basic plan to a better one. You pay more to get more. For example, going from a basic streaming plan to a premium plan with better sound and more songs is an upgrade.

Similar to Downgrades we have 2 options here, immediately and next billing period.

When an upgrade happens immediately, a prorated invoice will be generated and paid. If the invoice payment fails, the subscription will not be updated.

When an upgrade is set at the next billing period, the subscription won’t be updated until the next payment date.

This is how it will be displayed on the user’s side.

In this screenshot, our user is on the Basic plan and wants to upgrade to the Startup Plan.

In this screenshot, it is stated that the switch will be implemented immediately and the user will pay the prorated amount, based on the current subscription plan.

Cancellation Happens

Cancellation of a subscription means stopping the service or membership altogether. It’s like saying, “I don’t want this anymore.”

For example, if you cancel your streaming service subscription, you won’t be charged, and you won’t have access to it anymore.

When a cancellation happens immediately, the subscription is canceled immediately. However, if the cancellation happens during the Nex billing period, the subscription remains active until the end of the current billing period.

This is how cancelation appears at the user’s end.

Now that you understand these settings, you can make the changes as per your need.

Once you’ve adjusted the settings to your liking, just click the “Save” button. Once saved, subscriptions will stick to these preferences when they’re upgraded, downgraded, or canceled.

Thats it!

We have discussed everything you might encounter when using the subscription feature. Although the subscription function may seem overwhelming at first, it’s not as difficult as it seems once you understand the basics we’ve covered in this documentation.

Hope this article was helpful. But in case you need help, feel free to contact us.

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