---
title: "How do I adjust billing if a customer changes their plan mid-contract?"
description: "When a customer changes their subscription mid-cycle, calculate prorated charges or credits to reflect adjustments on the upcoming invoice."
url: "https://ordwaylabs.com/faqs/billing-adjustment-mid-contract/"
type: "Post"
publisher: "Ordway"
language: "en-US"
published: "2025-07-24T09:00:01+00:00"
updated: "2025-12-29T12:57:53+00:00"
author: "Ordway Labs"
categories:
  - "FAQs"
  - "Usage-Based Billing FAQs"
---

# How do I adjust billing if a customer changes their plan mid-contract?

## Short Answer

When a customer changes their subscription mid-cycle—upgrading, downgrading, or switching tiers—you’ll need to calculate prorated charges or credits and reflect those adjustments on the upcoming invoice. The goal is to match billing to actual service usage.

## Proration Formula (for reference)

(New Plan Price × Days Remaining ÷ Total Period) – (Old Plan Price × Days Remaining ÷ Total Period)

## How It Works

Mid-contract changes are common in SaaS. Customers may grow into a higher tier, scale down during a lull, or shift to a new pricing model altogether. When that happens, finance and billing teams need a clean way to reflect the change—without waiting for the next cycle. Here’s how most operators handle it:

* Calculate the delta. Start by determining the price difference between the old and new plans, prorated for the number of days left in the billing period.
* Issue a credit or incremental charge. If the customer downgraded, apply a [credit memo](/faqs/process-credit-memos-refunds-saas-billing/) to their account. If they upgraded, generate a one-off invoice to cover the additional charge.
* Update billing terms. Modify the subscription in your system so the new plan and pricing take effect immediately and carry forward into future billing runs.
* [Communicate clearly](/resources/video/past-events/reducing-customer-churn/). Send a revised invoice or billing confirmation that shows the adjustment, so there’s no confusion about what changed or why.

## Real-World Example

[OpenFin implemented automated mid-cycle adjustments to account](/resources/case-studies/financial-tech/openfin-case-study/) for frequent upgrades across their enterprise accounts. By removing manual invoice edits, they reduced billing errors and eliminated month-end reconciliations related to plan changes.

## Frequently Asked Questions

### Do I always need to issue a refund for a downgrade?

No. Most finance teams apply a credit to be used against future invoices unless your terms explicitly allow for refunds.

### Can this process be automated?

Yes. Advanced billing systems can detect plan changes, run proration logic, and apply adjustments automatically—without manual intervention.

### What if usage-based charges are also involved?

Handle them separately. [Metered usage](/products/metered-billing-software/)should be calculated and billed independently from plan-based charges, even if the timing overlaps.

Tired of manual edits and credit memos? Automate mid-cycle billing with [Ordway’s Recurring Billing Software](/products/recurring-billing-software/)

## About Ordway

Ordway is an all-in-one billing and revenue automation platform for growing B2B SaaS companies, typically from post-Series A to pre-IPO. It combines [Subscription Invoicing](/products/subscription-invoicing-software/), [Recurring Billing](/products/recurring-billing-software/), [Metered Billing](/products/metered-billing-software/), [SaaS Billing](/lp/ordway-saas-billing/), [SaaS Accounting](/products/saas-accounting-software/) and [AI-Powered Revenue Management](/products/ai-powered-revenue-management/) to automate complex pricing models, streamline revenue recognition and accelerate the financial close.