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Billing scenarios for one-time and recurring purchases in Cloud Solution Providers program (CSP) new commerce experience

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Appropriate roles: Admin agent | Billing admin | Helpdesk agent | Sales agent

Note

For a list of Cloud Solution Providers program (CSP) legacy billing scenarios, see Common billing scenarios for legacy CSP program partners working in Partner Center.

New commerce billing period or billing cycle

The new commerce billing period, or billing cycle is a clear and structured approach to managing subscription payments and invoicing within Cloud Solution Provider program (CSP). This system ensures transparency and predictability for partners and customers regarding financial aspects of their subscriptions. Let’s break down its key components and processes:

The billing period is fixed to a full calendar month, simplifying the tracking and management of subscription costs. This standardized approach ensures that billing periods align with the calendar, making it easier for partners to plan and reconcile their expenses.

Billing term

Billing terms define the duration of a subscription commitment. This duration can vary, with options ranging from monthly to multi-year agreements. Longer commitments often lead to discounted rates, offering financial benefits.

Billing plan

Billing plans set the payment schedule over the billing term. Options such as monthly, annual, or upfront payments are available, allowing you to choose based on their financial preferences and capabilities.

Invoicing and reconciliation

Invoices and reconciliation information are provided in the month following the billing period. For example, for a billing period from January 1 to 31, expect you invoices and detailed reconciliation information between February 6 and 8. This timeline ensures timely review and reconciliation of costs.

Benefits

The new commerce billing period provides several advantages:

  1. Predictability: With fixed billing periods and clear billing terms and plans, partners can more accurately anticipate expenses.

  2. Flexibility: Various billing terms and plans allow partners to choose options that best fit their budget and financial strategy.

  3. Simplicity: Aligning billing periods with calendar months simplifies subscription tracking and management.

  4. Timely information: A consistent schedule for invoices and reconciliation information ensures partners and customers have the information they need for efficient financial management.

The new commerce billing period offers a streamlined, flexible approach to managing subscription costs within the CSP program. By providing clear billing options and a predictable invoicing schedule, it supports effective financial planning and management for both partners and customers.

New commerce charge cycle

The new commerce charge cycle is designed to manage subscription payments efficiently, ensuring you understand when charges occur and how they're calculated. Unlike a billing period, which typically aligns with a calendar month, the charge cycle refers to the number of days billed for a subscription. This distinction is crucial for planning your finances and managing your payment schedules.

Key features of the charge cycle

  • Definition: The charge cycle is the period for which you're billed for a subscription, not necessarily aligned with a calendar month.

  • Variable duration:

    • Typically lasts 30 or 31 days.
    • For February, it can be 28 or 29 days, depending on whether it's a leap year.
    • Annual subscriptions have a charge cycle of 365 days, or 366 days in a leap year.

  • Start date: The cycle begins on the initial purchase date or when renewal/recurring charges start.

  • Cycle end: The cycle ends one day before the same date of the next month, year, or billing term.

  • Consistency: The cycle starts on the same day each month, year, or billing term, ensuring predictability in billing dates.

Example

  • Annual subscription with monthly billing: Consider an annual "Microsoft 365 Office E3" subscription purchased on February 21, 2022, with a monthly billing plan. This pattern continues, adjusting for the number of days in each month. Here's how it works:
  • Subscription start date: February 21, 2022
  • Billing plan: Monthly
  • Subscription term: Annual
    • First charge cycle: February 21, 2022, to March 20, 2022 (28 days)
    • Second charge cycle: March 21, 2022, to April 20, 2022 (31 days)
    • Third charge cycle: April 21, 2022, to May 20, 2022 (30 days)

Benefits of understanding the charge cycle

  • Financial planning: Knowing the exact dates and durations of charge cycles helps you budget more accurately and forecast your finances better.

  • Simplified management: By understanding when charges occur, you can manage your subscriptions easily and avoid unexpected charges or service interruptions.

  • Consistency: The recurring nature of the charge cycle, starting on the same day each month or year, provides consistency and makes tracking easier.

The new commerce charge cycle offers flexibility and predictability in managing subscription payments. By understanding the structure of the cycle, plan your finances effectively, predict expenses, and ensure continuous access to services without interruptions.

Tip

To end a subscription with another subscription or a calendar month, see align subscription end dates.

Calculate one-time and recurring charges

Important

To reconcile, include these billing details: Charge Start Date, Charge End Date, Effective Unit Price, Billable Quantity, Billing Frequency, Subscription Start Date, Subscription End Date, and Amount.

For more information, see CSP one-time purchase reconciliation file fields.

Effective billing reconciliation ensures accurate financial records and smooth management of your business subscriptions.

  • Maintain accuracy: Regularly check your billing statements to verify that all transactions match your records.
  • Identify discrepancies: Quickly spot any inconsistencies to address potential issues before they escalate.
  • Streamline processes: Implement efficient systems to automate and simplify your billing reconciliation tasks.

By focusing on these steps, you can improve your financial management and enhance your business operations.

Let's say, on June 18, 2020, you bought 10 monthly licenses of Microsoft 365 Business Standard subscription for a unit price of EUR 10.08. Your goal is to reconcile your charges in the billing period efficiently.

Here's how your June billing period reconciliation line items look when you receive them in July. It features a clear billing line item with all the purchase details.

This streamlined approach ensures accurate financial tracking and makes managing your subscriptions easier.

OrderDate ChargeStartDate ChargeEndDate ChargeType EffectiveUnitPrice BillableQuantity Total
June 18, 2021 June 18, 2021 July 17, 2021 new 10.08 10 100.8

When you renew your subscription, you see a new billing line item or transaction. This line item should have the ChargeType listed as "renew" and the ChargeStartDate as "July 18, 2021."

OrderDate ChargeStartDate ChargeEndDate ChargeType EffectiveUnitPrice BillableQuantity Total
July 18, 2021 July 18, 2021 August 17, 2021 renew 10.08 10 100.8

When you choose an annual subscription, you pay EUR 100.8 each month for a year, starting in July. From August onwards, these charges are marked with the ChargeType "cycleCharge."

OrderDate ChargeStartDate ChargeEndDate ChargeType EffectiveUnitPrice BillableQuantity Total
July 18, 2021 July 18, 2021 August 17, 2021 cycleCharge 10.08 10 100.8

When you prepay for your annual subscription, you see a single billing line item in your June reconciliation data.

OrderDate ChargeStartDate ChargeEndDate ChargeType EffectiveUnitPrice BillableQuantity Total
June 18, 2021 June 18, 2021 June 17, 2022 new 120.96 10 1,209.6

Your reconciliation data shows how much you're billed for your subscriptions. Clearly understanding these details helps you stay on top of your subscription costs and simplify your financial tracking.

Important

When you purchase Microsoft 365 E5, you get a comprehensive solution that covers both telecommunication and non-telecommunication services. To make billing clearer and more manageable, you see two separate line items or transactions in your reconciliation data: one for telecommunication charges and another for non-telecommunication charges. This distinction helps you better understand and track your charges and taxes, ensuring a smooth and transparent billing process.

Distinguish between one-time and recurring charges in invoice reconciliation files or line items

To effectively differentiate between one-time and recurring charges in invoice reconciliation files or line items, follow these guidelines:

One-time or upfront charges:

  • Ensure that the ChargeStartDate and ChargeEndDate match the SubscriptionStartDate and SubscriptionEndDate.
  • Verify that the BillingFrequency is left blank.

Recurring payment or billing plan:

  • Check that the ChargeStartDate and ChargeEndDate are a month apart and confirm the BillingFrequency is "Monthly."
  • Alternatively, ensure the ChargeStartDate and ChargeEndDate are a year apart, with the BillingFrequency set to "Annual."

By following these steps, you should be able to clearly distinguish between one-time and recurring charges, ensuring accurate and efficient reconciliation.

Calculate the costs of a product or subscription with both fixed fee and pay-as-you-go charges

Maximizing the benefits of your subscription-based products is straightforward. Many products come with a fixed number of prepaid units and extra usage charged at a pay-as-you-go rate. For example:

  • With a Microsoft 365 subscription, you pay USD 10 per month for 100 minutes of calls. Any extra minutes cost 10 cents each.

  • With SendGrid, you pay USD 10 per month to send 100 emails. Extra emails cost 10 cents each.

To efficiently manage your subscription costs using daily rated usage and invoice reconciliation data, follow these steps:

  1. Understand daily charges: The BillingPreTaxTotal shows your daily pay-as-you-go charges. For instance, using 50 extra minutes at 10 cents per minute cost you USD 5 for that day.

  2. Verify charges: Compare your monthly pay-as-you-go charges shown in the invoice reconciliation data (Total) with your daily usage charges. For example, if you see USD 5 for 50 extra units (BillableQuantity), it matches your daily usage.

  3. Identify subscription costs: Your fixed monthly plan cost is shown in the Total, which should be USD 10 each month.

  4. Calculate total cost: Check the Product and SKU IDs in the invoice reconciliation data. Typically, you have line items for both fixed fees and pay-as-you-go costs. The combined total should be USD 15.

By following these steps, you can effectively manage and optimize your subscription expenses. This approach encourages smart usage and clear oversight of your costs.

Determine the product category

Here's how you can identify the product category in the reconciliation data. These methods are effective for most transactions, with occasional exceptions.

Condition Product Category
PublisherName says "Microsoft" or "Microsoft Corporation" Microsoft product
PublisherName isn't "Microsoft" or "Microsoft Corporation," and PublisherId isn't empty. Non-Microsoft or marketplace product
TermAndBillingCycle mentions "Reservation" Azure reservation
TermAndBillingCycle includes "Savings Plan" Azure savings plan
TermAndBillingCycle contains "one-month," "one-year," or "three-year" License-based. However, double-check to be sure.
TermAndBillingCycle mentions "Subscription"
If "Subscription" is missing, use the SKU name like "SQL Server" or "Windows Server."		 Software subscription
TermAndBillingCycle is blank, and ChargeEndDate is empty Perpetual software
SubscriptionDescription says "Azure plan" Azure plan
For all remaining conditions Use "Azure plan" as the name for the remaining product category. Feel free to customize each subscription name as needed. Ensure nothing is missing.

These guidelines should help you efficiently categorize your products, making your reconciliation process smoother and more accurate.

Determine the billing term and billing plan in invoice reconciliation files or line items

Understanding your subscription's billing term and plan is key to managing payments and renewals. Here's how to interpret these details in your invoice reconciliation files or line items:

Key definitions

  • Billing term:
    The total duration of your subscription, from the SubscriptionStartDate to the SubscriptionEndDate.

    • Example: A one-year term spans from May 25, 2021 to May 24, 2022.

  • Billing plan:
    How often you’re billed within the term, defined by the interval between ChargeStartDate and ChargeEndDate.

    • Example: A one-year term with monthly billing charges you every month (May 25–June 24, June 25–July 24, etc.).

Interpret the TermAndBillingCycle field

This field varies by subscription type and isn't standardized. Use the dates to clarify:

TermAndBillingCycle Subscription Start Date Subscription End Date Charge Start Date Charge End Date Billing Frequency/Plan Billing Term
One-month commitment for monthly billing May 25, 2021 June 24, 2021 May 25, 2021 June 24, 2021 One-month
One-year commitment for monthly/yearly billing May 25, 2021 May 24, 2022 May 25, 2021 June 24, 2021 Monthly One-year
One-year term duration May 25, 2021 May 24, 2022 May 25, 2021 May 24, 2022 One-year
Three-year commitment for monthly/yearly billing May 25, 2021 May 24, 2024 May 25, 2021 June 24, 2021 Monthly Three-year
Three-year commitment for monthly/yearly billing May 25, 2021 May 24, 2024 May 25, 2021 May 24, 2022 Annual Three-year
Three-year commitment for monthly/yearly billing May 25, 2021 May 24, 2024 May 25, 2021 May 24, 2024 Three-year

Follow these steps for clarity

  1. Check dates, not TermAndBillingCycle:

    • Use SubscriptionStartDate and SubscriptionEndDate to confirm the term.

      • Billing term = SubscriptionEndDate - SubscriptionStartDate

    • Use ChargeStartDate and ChargeEndDate to identify billing frequency.

      • Billing plan = ChargeEndDate - ChargeStartDate
      • When charge period equals subscription period, the subscription is billed upfront.

  2. Cross-reference BillingFrequency:

    • Monthly: Charges repeat every month within the billing term.

    • Annual: Charges repeat yearly within the billing term.

    • Empty: Single charge for the full term (for example, one-month or three-year upfront).

By understanding these terms, manage your subscriptions and charge cycles. This knowledge empowers you to keep track upcoming charges and can avoid any confusion related to your billing statements.

Subscription expiration and renewal dates on special cases

Here's when monthly subscriptions expire when you buy near the end of a month:

When you buy on the last day of a month

If you start a monthly or monthly-billed annual subscription on the last day of any month, your next billing or renewal occurs one day earlier in the following month.

Example:

  • If the next month has 31 days, your subscription ends on the 30th day.
  • If the next month has 30 days, your subscription ends on the 29th day.
  • If the next month is February in a nonleap year, your subscription ends on the 27th day.
  • If the next month is February in a leap year, your subscription ends on the 28th day.

Note

Each line item is a standalone entity with its own charge cycle. All dates are in Coordinated Universal Time (UTC).

Reconciliation line items of the subscription:

BillingTerm OrderDate ChargeType SubscriptionStartDate SubscriptionEndDate RenewDate ChargeStartDate ChargeEndDate
Monthly January 31, 2021 new January 31, 2021 February 27, 2021 February 28, 2021 January 31, 2021 February 27, 2021
Monthly February 28, 2021 new February 28, 2021 March 30, 2021 March 28, 2021 February 28, 2021 March 30, 2021
Monthly May 31, 2021 new May 31, 2021 June 29, 2021 June 30, 2021 May 31, 2021 June 29, 2021
Monthly June 30, 2021 new June 30, 2021 July 29, 2021 July 30, 2021 June 30, 2021 July 29, 2021
Monthly July 31, 2021 new July 31, 2021 August 30, 2021 August 31, 2021 July 31, 2021 August 30, 2021

When you buy on the day before the last day of a month

If you start a monthly or monthly-billed annual subscription on the second-last day of any month, your next billing or renewal occurs two days earlier in the following month.

Example:

  • If the next month has 31 days, your subscription ends on the 29th day.
  • If the next month has 30 days, your subscription ends on the 28th day.
  • If the next month is February in a nonleap year, your subscription ends on the 26th day.
  • If the next month is February in a leap year, your subscription ends on the 27th day.

Note

Each line item is a standalone entity with its own charge cycle. All dates are in Coordinated Universal Time (UTC).

Reconciliation line items of the subscription:

BillingTerm OrderDate ChargeType SubscriptionStartDate SubscriptionEndDate RenewDate ChargeStartDate ChargeEndDate
Monthly January 30, 2021 new January 30, 2021 February 26, 2021 February 27, 2021 January 30, 2021 February 26, 2021
Monthly February 27, 2021 new February 27, 2021 March 29, 2021 March 30, 2021 February 27, 2021 March 29, 2021
Monthly May 30, 2021 new May 30, 2021 June 29, 2021 June 30, 2021 May 30, 2021 June 29, 2021
Monthly June 29, 2021 new June 29, 2021 July 28, 2021 July 29, 2021 June 29, 2021 July 28, 2021
Monthly July 30, 2021 new July 30, 2021 August 29, 2021 August 30, 2021 July 30, 2021 August 29, 2021

Reconcile charges after adding or removing licenses of a subscription

Learn how we adjust charges for license-based products when you update the license count, including prorated charges and refunds.

Key concepts

Charge cycle: Typically 30 or 31 days, but 28 or 29 for February for monthly billed subscriptions. It starts from your initial purchase date or when renewal or recurring charges begin. For annual subscriptions, the cycle charge is 365 days (366 in leap years). To learn more about how charge cycles are determined, see new commerce charge cycle.

Daily rate: Unit price ÷ total days in the charge cycle.

Prorate charge cycle or billing days: Number of days from the change until the end of the charge cycle.

Effective unit price: Daily rate × billing days.

Total: Effective unit price x license count.

Total amounts might change due to taxes, exchange rates, and other adjustments.

Add licenses

Scenario:

Let's say you bought 10 licenses of a monthly "Microsoft 365 Business Standard" subscription on June 18, 2021. Each license costs EUR 10.08. On June 20, you added two more licenses.

  • June 18: Purchase 10 licenses of "Microsoft 365 Business Standard" at EUR 10.08/month.
  • June 20: Add two licenses (total 12).
  • Charge cycle: June 18 – July 17 (30 days) since June has 30 days.
  • Prorate charge cycle or billing days: June 20 – July 17 (28 days).

To change the number of licenses, the system goes through a two-step process that happens simultaneously:

  • Refund (Wipe): Refund your unused portion. The system looks at:

    • Your current number of licenses
    • The remaining days in your billing cycle
    • The daily rate for each license

  • Charge (Recreate): Charge for the new license count, but only for the remaining days.

Billing process

Initial purchase (June 18):

You start with 10 licenses at EUR 10.08 each for a full 30-day cycle. This calculation is straightforward - you pay the full price because you're using the licenses for the entire period:

EUR 10.08 per license × 10 licenses = EUR 100.80 total

Adding licenses (June 20) :

When you add two licenses two days into your cycle, the system calculates:

First, the refund for your existing 10 licenses:

Original daily rate: EUR 10.08 ÷ 30 days = EUR 0.336 per day
Remaining days: 28 days
Effective unit price: EUR 0.336 × 28 = EUR 9.408 per license
Refund amount: EUR 9.408 × 10 licenses = EUR 94.08 (rounded down to two decimal places)

Then, the new charge for 12 licenses:

Same daily rate: EUR 0.336 per day
Same remaining days: 28 days
Same effective unit price: EUR 9.408 per license
New charge: EUR 9.408 × 12 licenses = EUR 112.89 (rounded down to two decimal places)

Remove licenses

Scenario:

If you removed four licenses on June 20, we adjust the charges accordingly.

  • June 20: Add two licenses (total 12).
  • June 20: Remove four licenses (total 8).
  • Charge cycle: June 18 – July 17 (30 days) since June has 30 days.
  • Prorate charge cycle or billing days: June 20 – July 17 (28 days).

Billing process

Removing licenses (June 20):

First, refund the current 12 licenses:

Daily rate: EUR 0.336 per day
Remaining days: 28 days
Effective unit price: EUR 9.408 per license
Refund amount: EUR 9.408 × 12 licenses = EUR 112.89 (rounded down to two decimal places)

Then, charge for the new eight licenses:

Same daily rate: EUR 0.336 per day
Same remaining days: 28 days
Same effective unit price: EUR 9.408 per license
New charge: EUR 9.408 × 8 licenses = EUR 75.26 (rounded down to two decimal places)

Reconciliation line items for June billing period after adding and removing the licenses:

OrderDate ChargeType UnitPrice ChargeStartDate ChargeEndDate EffectiveUnitPrice BillableQuantity Total
June 18, 2021 new 10.08 June 18, 2021 July 17, 2021 10.08 10 100.8
June 20, 2021 addQuantity 10.08 June 20, 2021 July 17, 2021 –9.408 10 –94.08
June 20, 2021 addQuantity 10.08 June 20, 2021 July 17, 2021 9.408 12 112.89
June 20, 2021 removeQuantity 10.08 June 20, 2021 July 17, 2021 –9.408 12 –112.89
June 20, 2021 removeQuantity 10.08 June 20, 2021 July 17, 2021 9.408 8 75.26

Add and remove license with cross-charge-cycle:

Scenario:

Assuming you added two licenses on July 2 and removed four licenses on July 3, these changes would be reflected in the July reconciliation line items. Our billing cycle aligns with the calendar month, and according to our reconciliation principles, only transactions occurring within a specific month are included in that month's reconciliation. This method ensures accuracy and transparency in our billing process.

  • June 18: Purchase 10 licenses of "Microsoft 365 Business Standard" at EUR 10.08/month.
  • July 2: Add two licenses (total 12).
  • July 3: Remove four licenses (total 8).
  • Charge cycle: June 18 – July 17 (30 days). The changes occurred in July, while the purchase was made in June, which has 30 days.
  • Prorate charge cycle or billing days when adding license: July 2 – July 17 (16 days).
  • Prorate charge cycle or billing days when removing license: July 5 – July 17 (13 days).

Billing process

Initial purchase (June 18):

Initial purchase was on June 18 and already included in the June reconciliation line items. It doesn't appear again in July reconciliation line items.

Adding licenses (July 2) :

When you add two licenses two days into your cycle, the system calculates:

First, the refund for your existing 10 licenses:

Original daily rate: EUR 10.08 ÷ 30 days = EUR 0.336 per day
Remaining days: 16 days 
Effective unit price: EUR 0.336 × 16 = EUR 5.376 per license
Refund amount: EUR 5.376 × 10 licenses = EUR 53.76 (rounded down to two decimal places)

Then, the new charge for 12 licenses:

Same daily rate: EUR 0.336 per day
Same remaining days: 16 days
Same effective unit price: EUR 5.376 per license
New charge: EUR 5.376 × 12 licenses = EUR 64.51 (rounded down to two decimal places)

Removing licenses (July 5) :

When you remove four licenses two days into your cycle, the system calculates:

First, the refund for your existing 12 licenses:

Original daily rate: EUR 10.08 ÷ 30 days = EUR 0.336 per day
Remaining days: 13 days 
Effective unit price: EUR 0.336 × 13 = EUR 4.368 per license
Refund amount: EUR 4.368 × 12 licenses = EUR 52.41 (rounded down to two decimal places)

Then, the new charge for eight licenses:

Same daily rate: EUR 0.336 per day
Same remaining days: 13 days
Same effective unit price: EUR 4.368 per license
New charge: EUR 4.368 × 8 licenses = EUR 34.94 (rounded down to two decimal places)

Reconciliation line items for July billing period after adding and removing the licenses:

OrderDate ChargeType UnitPrice ChargeStartDate ChargeEndDate EffectiveUnitPrice BillableQuantity Total
July 2, 2021 addQuantity 10.08 July 2, 2021 July 17, 2021 –5.376 10 –53.76
July 2, 2021 addQuantity 10.08 July 2, 2021 July 17, 2021 5.376 12 64.51
July 5, 2021 removeQuantity 10.08 July 5, 2021 July 17, 2021 –4.368 12 –52.41
July 5, 2021 removeQuantity 10.08 July 5, 2021 July 17, 2021 4.368 8 34.94

Understand the refund calculation process for cancellations

When you cancel a subscription, the system performs two main calculations:

  • Determines what you already paid for.
  • Calculates the refund for the unused portion.

Key concepts

Charge cycle: Typically 30 or 31 days, but 28 or 29 for February for monthly billed subscriptions. It starts from your initial purchase date or when renewal or recurring charges begin. For annual subscriptions, the cycle charge is 365 days (366 in leap years). To learn more about how charge cycles are determined, see new commerce charge cycle.

Daily rate: Unit price ÷ total days in the charge cycle.

Cancellation and unused days: Number of days from the cancellation until the end of the charge cycle.

Effective unit price for refund: Daily rate × unused days.

Total refund: Effective unit price x license count.

Total cost and refund might change due to taxes, exchange rates, and other adjustments.

Cancel a subscription

Scenario:

Let's assume, you bought 10 licenses of a monthly "Microsoft 365 Business Standard" subscription on July 15, 2021, and canceled it on July 17. Each license costs EUR 10.08.

  • July 15: Purchase 10 licenses of "Microsoft 365 Business Standard" at EUR 10.08/month.
  • July 17: Canceled the subscription.
  • Charge cycle: July 15 – August 14 (31 days). July has 31 days.
  • Unused days after canceling the subscription: July 17 – August 14 (29 days).

Billing process

Initial purchase (July 15):

You start with 10 licenses at EUR 10.08 each for a full 31-day cycle. This calculation is straightforward - you pay the full price because you're using the licenses for the entire period:

EUR 10.08 per license × 10 licenses = EUR 100.80 total

Then, you cancel the subscription on July 17:

Original daily rate: EUR 10.08 ÷ 31 days = EUR 0.32516129 per day
Remaining days: 29 days 
Effective unit price: EUR 0.32516129 × 29 = EUR 9.429677419 per license
Refund amount: EUR 9.429677419 × 10 licenses = EUR 94.20 (rounded down to two decimal places)

Reconciliation line items for the July billing period after cancellation:

OrderDate ChargeType UnitPrice ChargeStartDate ChargeEndDate EffectiveUnitPrice BillableQuantity Total
July 15, 2021 new 10.08 July 15, 2021 August 14, 2021 10.08 10 100.8
July 17, 2021 cancelImmediate 10.08 July 17, 2021 August 14, 2021 –9.429677419 10 –94.20

Refund calculation summary for cancellations

The refund policy applies to all new commerce per-user or license-based subscriptions, regardless of length.

  1. 24-hour full refund:

    • Eligibility: Cancel within 24 hours of purchase or renewal.
    • Cancellation method: Self-serve through the system.
    • Refund processing time: Takes up to 24 hours. Check your estimates files or line items for confirmation.

  2. Seven-day prorated refund:

    • Eligibility: Cancel after 24 hours but within seven days of purchase or renewal.
    • Refund calculation: Based on the time elapsed ("unused portion").
    • Cancellation method: Self-serve through the system.
    • Refund processing time: Takes up to 24 hours. Check your estimates files or line items for confirmation.

  3. Beyond seven days no refund:

    • After seven days, no refund is provided. Cancellation method: For unique situations or exceptional cases, open a support ticket but the refund isn't guaranteed. For more information, see new commerce cancellation policy.
    • Refund processing time: Depends on the eligibility checks and processing time. Check your estimates files or line items for confirmation.

Important

  • Annual subscriptions: The daily rate calculation remains consistent. For an annual subscription with 365 or 366 (leap year) days, the daily rate would be:

    • Daily rate = (Annual unit price) ÷ (365 or 366)

The same method applies for calculating unused days and the refund amount.

  • Varying month lengths: The calculation adjusts based on the number of days in the charge cycle. For example, if it starts in February, the daily rate accounts for whether the month has 28 or 29 days.

The refund process is designed to ensure fairness by prorating based on unused days. Understanding the daily rate calculation and how it applies to different scenarios helps in predicting refund amounts and managing subscription costs effectively. For specific cases like annual subscriptions or multiple licenses, the same principles apply, with adjustments for the unique parameters of each situation.

Understanding how to upgrade a subscription is essential to effectively managing your services and costs. Here's how the process works:

When you upgrade a subscription, you transition from one service tier to another. The system ensures you're billed accurately for the services you use. If you upgrade from a basic to a premium subscription mid-month, you're charged the basic rate for the period you used it and the premium rate for the rest of the charge cycle.

There are two main types of upgrades:

  1. Full upgrade: Moving all your licenses from one service level to another. All users have access to the new service tier.

  2. Partial upgrade: Upgrade only a portion of your licenses to the premium service level. This process allows you to customize service levels according to specific needs within your organization.

By understanding these upgrade options, you can manage your subscriptions and costs more effectively. Upgrades help a smooth transition to a service level that aligns perfectly with your requirements.

Key concepts of reconciling old and new subscriptions

Identify the upgrade date: Determine the exact date when the upgrade occurred. This date marks the transition point from the old subscription to the new one and the prorated refunds and charges are calculated from this date.

Charge cycle: Typically 30 or 31 days, but 28 or 29 for February for monthly billed subscriptions. It starts from your initial purchase date or when renewal or recurring charges begin. For annual subscriptions, the cycle charge is 365 days (366 in leap years). To learn more about how charge cycles are determined, see new commerce charge cycle.

Daily rate: Unit price ÷ total days in the charge cycle.

Prorate charge cycle or billing days: Number of days from the upgrade until the end of the charge cycle.

Effective unit price: Daily rate × billing days.

Calculate prorated charges and refunds:

For the old subscription: Compute the refund for the period from the upgrade date to the end of the charge cycle. Use the formula:

  • Refund = Effective unit price × license count.

For the new subscription: Calculate the charge from the upgrade date to the end of the charge cycle using the same formula.

  • Charge = Effective unit price × license count.

Total refunds and charges might change due to taxes, exchange rates, and other adjustments.

Full upgrade

Scenario:

Let's say, you bought 300 licenses of a monthly "Microsoft 365 Business Standard" subscription on June 18 for your customer Contoso. Each license costs EUR 10.08. On June 25, you upgraded the subscription to "Office 365 E1," as per Contoso's request. The new subscription's price for each license is EUR 6.43.

  • June 18: Initial purchase of 300 licenses of a "Microsoft 365 Business Standard" subscription at EUR 10.08/month.
  • June 25: Upgrade all 300 licenses to "Office 365 E1" subscription at EUR 6.43/month.
  • Charge cycle: June 18 to July 17 (30 days total) since June has 30 days.

Billing process:

  1. Initial charge (June 18 - July 17):

    You're initially charged for "Microsoft 365 Business Standard" from June 18 to July 17.

    Total charge: 300 licenses × EUR 10.08 per license = EUR 3,024 (rounded down to two decimal places)

  2. Refund for unused period (June 25 - July 17):

    After you upgrade the subscription to "Office 365 E1" on June 25, a refund is issued for the unused portion of "Microsoft 365 Business Standard" from June 25 to July 17.

    Daily rate: EUR 10.08 ÷ 30 days = EUR 0.336 per day

Remaining period: 23 days (June 25 to July 17)

Effective unit price: EUR 0.336 × 23 days = EUR 7.72 per license

Total refund: EUR 7.72 × 300 licenses = EUR 2,316 (rounded down to two decimal places)

  3. Charge for new subscription (June 25 - July 17):

    You're billed for "Office 365 E1" from June 25 to July 17.

    Daily rate: EUR 6.43 ÷ 30 days = EUR 0.214 per day

Same remaining period: 23 days (June 25 to July 17)

Effective unit price: EUR 0.214 × 23 days = EUR 4.92 per license

Total charge: EUR 4.92 × 300 licenses = EUR 1,476 (rounded down to two decimal places)

Reconciliation line items for June billing period after full upgrade:

OrderDate ProductName ChargeType UnitPrice ChargeStartDate ChargeEndDate EffectiveUnitPrice BillableQuantity Total SubscriptionId ReferenceId
June 18, 2021 Microsoft 365 Business Standard new 10.08 June 18, 2021 July 17, 2021 10.08 300 3024 aaaa0a0a-bb1b-cc2c-dd3d-eeeeee4e4e4e aaaa0000-bb11-2222-33cc-444444dddddd
June 25, 2021 Microsoft 365 Business Standard convert 10.08 June 25, 2021 July 17, 2021 –7.72 300 –2316 aaaa0a0a-bb1b-cc2c-dd3d-eeeeee4e4e4e bbbb1111-cc22-3333-44dd-555555eeeeee
June 25, 2021 Office 365 E1 convert 6.43 June 25, 2021 July 17, 2021 4.92 300 1476 bbbb1b1b-cc2c-dd3d-ee4e-ffffff5f5f5f bbbb1111-cc22-3333-44dd-555555eeeeee

Partial upgrade

Scenario:

Let's say, you bought 300 licenses of a monthly "Microsoft 365 Business Standard" subscription on June 18 for your customer Contoso. Each license costs EUR 10.08. On June 25, you upgraded 100 licenses of the subscription to "Office 365 E1," as per Contoso's request. The new subscription's price for each license is EUR 6.43.

  • June 18: Initial purchase of 300 licenses of a "Microsoft 365 Business Standard" subscription at EUR 10.08/month.
  • June 25: Upgrade only 100 licenses to "Office 365 E1" subscription at EUR 6.43/month.
  • Charge cycle: June 18 to July 17 (30 days total) since June has 30 days.

Billing process:

  1. Initial charge (June 18 - July 17):

    You're initially charged for "Microsoft 365 Business Standard" from June 18 to July 17.

    Total charge: 300 licenses × EUR 10.08 per license = EUR 3,024 (rounded down to two decimal places)

  2. Refund for unused period (June 25 - July 17):

    After you upgrade the subscription to "Office 365 E1" on June 25, a refund is issued for the unused portion of "Microsoft 365 Business Standard" from June 25 to July 17.

    Daily rate: EUR 10.08 ÷ 30 days = EUR 0.336 per day

Remaining period: 23 days (June 25 to July 17)

Unused license count: 100 becuse you upgraded those licenses

Effective unit price: EUR 0.336 × 23 days = EUR 7.72 per license

Total refund: EUR 7.72 × 100 licenses = EUR 772 (rounded down to two decimal places)

  3. Charge for new subscription (June 25 - July 17):

    You're billed for "Office 365 E1" from June 25 to July 17.

    Daily rate: EUR 6.43 ÷ 30 days = EUR 0.214 per day

Same remaining period: 23 days (June 25 to July 17)

Same license count: 100 becuse you upgraded those licenses

Effective unit price: EUR 0.214 × 23 days = EUR 4.92 per license

Total charge: EUR 4.92 × 100 licenses = EUR 492 (rounded down to two decimal places)

Reconciliation line items for June billing period after partial upgrade:

OrderDate ProductName ChargeType UnitPrice ChargeStartDate ChargeEndDate EffectiveUnitPrice BillableQuantity Total SubscriptionId ReferenceId
June 18, 2021 Microsoft 365 Business Standard new 10.08 June 18, 2021 July 17, 2021 10.08 300 3024 aaaa0a0a-bb1b-cc2c-dd3d-eeeeee4e4e4e aaaa0000-bb11-2222-33cc-444444dddddd
June 25, 2021 Microsoft 365 Business Standard convert 10.08 June 25, 2021 July 17, 2021 –7.72 100 -772 aaaa0a0a-bb1b-cc2c-dd3d-eeeeee4e4e4e bbbb1111-cc22-3333-44dd-555555eeeeee
June 25, 2021 Office 365 E1 convert 6.43 June 25, 2021 July 17, 2021 4.92 100 492 bbbb1b1b-cc2c-dd3d-ee4e-ffffff5f5f5f bbbb1111-cc22-3333-44dd-555555eeeeee

Note

Charge types:

  • The "convert" charge type is used when upgrading to a new subscription.
  • The "moveQuantity" charge type applies when you already have the advanced subscription and are adjusting quantities.

This approach ensures transparent and equitable billing, accurately reflecting the services used before and after the upgrade. Final amounts may vary due to taxes and exchange rates, but the core principle of paying only for what you use remains consistent.

To associate the refund for the old subscription with the charge for the new subscription, follow these steps:

  1. Identify the SubscriptionId: Find the SubscriptionId of the original subscription. This step helps with tracking all related transactions.

  2. Find the matching ReferenceId: Search through your reconciliation files or line items to match the ReferenceId linked to your base SubscriptionId. This ReferenceId connects the refund to the subsequent charge.

  3. Link related transactions: Use the identified ReferenceId to associate all related transactions. This step includes the refund for the old subscription and the charge for the new one. This step ensures a clear and direct connection between these financial adjustments.

By following these steps, you can manage and reconcile your billing information, ensuring transparency and accuracy in your financial records.

Determining the total number of licenses of a subscription after multiple adjustments

Calculating total licenses accurately is crucial for effectively managing subscriptions. Here's a streamlined process using Contoso as an example to illustrate this calculation methodically.

Example

Let's say, you initially purchased 10 licenses of an annual "Microsoft 365 Business Standard" subscription with a monthly billing plan for your customer Contoso on March 5, 2022. Throughout the billing period, you made several changes to the license count based on their team size and project requirements.

  • March 5: Purchased 10 licenses of "Microsoft 365 Business Standard" subscription. The SubscriptionId for this purchase is "284b0ff0-0e74-4f65-cb23-f8ad95867994."

  • March 7: Added 5 licenses.

  • March 10: Added 10 licenses.

  • March 12: Removed 2 licenses.

  • March 14: Removed 3 licenses.

  • March 25: Added 10 licenses.

  • March 27: Upgraded five licenses to Office 365 E1.

To determine the total number of licenses after adjustments for the Microsoft 365 Business Standard subscription purchased for Contoso, follow these steps:

Step-by-step calculation process

  1. Identify the initial transaction:

    • Search for the initial transaction in the billing line items where ChargeType is "new" or "cycleCharge" or "renew" for ongoing charge cycle.
    • Ensure ProductName or SkuName matches "Microsoft 365 Business Standard."
    • Note the OrderDate and SubscriptionId for this transaction. In this case, the OrderDate is March 5, 2022 and SubscriptionId is "284b0ff0-0e74-4f65-cb23-f8ad95867994."

  2. Track subsequent changes:

    • Identify all line items related to this subscription by using this condition: SubscriptionId = "284b0ff0-0e74-4f65-cb23-f8ad95867994" and OrderDate >= "March 5, 2022".
    • For each change (additions or removals), note the ChargeType, BillableQuantity, and EffectiveUnitPrice.

  3. Handle upgrades:

    • Treat the full upgrade as both a removal and an addition. Remove the old licenses and add the new ones. For partial upgrades, consider only the removal the old licenses because the upgraded licenses move under a new subscription.

  4. Sum positive adjustments:

    • Sum the BillableQuantity for all line items with a positive EffectiveUnitPrice from the OrderDate (from step 1) onwards. This step includes all licenses added during the billing period.

    • Suggested condition to check: SubscriptionId = "284b0ff0-0e74-4f65-cb23-f8ad95867994" and OrderDate >= "March 5, 2022" and EffectiveUnitPrice > 0.

      • Initial purchase: 10 licenses

      • March 7 addition: 5 licenses

      • March 10 addition: 10 licenses

      • March 25 addition: 10 licenses

    • We get a positive total of 35 licenses.

  5. Sum negative adjustments:

    • Sum the BillableQuantity for all line items with a negative EffectiveUnitPrice (excluding "customerCredit" ChargeType) from the OrderDate onwards. This step includes all licenses removed during the billing period.

    • Suggested condition to check: SubscriptionId = "284b0ff0-0e74-4f65-cb23-f8ad95867994" and OrderDate >= "March 5, 2022" and EffectiveUnitPrice < 0.

      • March 12 removal: 2 licenses

      • March 14 removal: 3 licenses

      • March 27 removal: 5 licenses (partially upgraded from Microsoft Business Standard to Office 365 E1)

      • We get a negative total of 10 licenses.

  6. Calculate net licenses:

    • Subtract the total removed licenses (from step 5) from the total added licenses (from step 4) to get the net licenses billed for the period.

    • Total = Sum of positive adjustments - Sum of negative adjustments
In this case: 35 - 10 = 25 total licenses

By following these steps, systematically track all changes and accurately determine the total number of licenses billed for the period after all adjustments. This approach ensures clarity and helps in managing subscriptions effectively.

Considerations for different billing plans

This method works well for monthly billing plans, as adjustments are typically reflected in each billing cycle. For annual or one-time billed subscriptions, examine each line item individually when changes occur, as billing patterns and adjustment calculations vary.

Reconciliation line items in the March billing period after adjusting and upgrading the licenses:

OrderDate ProductName ChargeType UnitPrice BillableQuantity EffectiveUnitPrice Total SubscriptionId ChargeStartDate ChargeEndDate ReferenceId
March 5, 2022 Microsoft 365 Business Standard new 12 10 12.00 120 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 5, 2022 April 4, 2022 7d71c595-4635-40d1-a9e2-b34e63b01764
March 7, 2022 Microsoft 365 Business Standard addQuantity 12 10 –11.23 –112.25 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 7, 2022 April 4, 2022 12d33e18-061e-4040-ad77-fcd77c1a9943
March 7, 2022 Microsoft 365 Business Standard addQuantity 12 15 11.23 168.38 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 7, 2022 April 4, 2022 12d33e18-061e-4040-ad77-fcd77c1a9943
March 10, 2022 Microsoft 365 Business Standard addQuantity 12 15 –10.06 –150.96 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 10, 2022 April 4, 2022 dc2a0a41-6a51-4837-8956-af5ffd92b094
March 10, 2022 Microsoft 365 Business Standard addQuantity 12 25 10.06 251.61 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 10, 2022 April 4, 2022 dc2a0a41-6a51-4837-8956-af5ffd92b094
March 12, 2022 Microsoft 365 Business Standard removeQuantity 12 25 –9.29 –232.25 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 12, 2022 April 4, 2022 2f8965ff-512b-4233-9a74-1f54a6ad71d0
March 12, 2022 Microsoft 365 Business Standard removeQuantity 12 23 9.29 213.67 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 12, 2022 April 4, 2022 2f8965ff-512b-4233-9a74-1f54a6ad71d0
March 14, 2022 Microsoft 365 Business Standard removeQuantity 12 23 –8.52 –195.87 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 14, 2022 April 4, 2022 73b3dc36-f36d-4bbf-af8f-30c9b73ac4f6
March 14, 2022 Microsoft 365 Business Standard removeQuantity 12 20 8.52 170.32 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 14, 2022 April 4, 2022 73b3dc36-f36d-4bbf-af8f-30c9b73ac4f6
March 25, 2022 Microsoft 365 Business Standard addQuantity 12 20 –4.26 –85.16 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 25, 2022 April 4, 2022 6759acd5-a8a9-4402-94b7-803baa64a78e
March 25, 2022 Microsoft 365 Business Standard addQuantity 12 30 4.26 127.74 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 25, 2022 April 4, 2022 6759acd5-a8a9-4402-94b7-803baa64a78e
March 27, 2022 Microsoft 365 Business Standard convert 12 5 –3.48 –17.4 284b0ff0-0e74-4f65-cb23-f8ad95867994 March 27, 2022 April 4, 2022 a11af6ef-8523-4eba-b1fa-fe5069dedea7
March 27, 2022 Office 365 E1 convert 10 5 2.90 14.50 c30e1e5c-a20f-4640-83d1-1f7a3e664b43 March 27, 2022 April 4, 2022 a11af6ef-8523-4eba-b1fa-fe5069dedea7

Reconcile charges after converting a trial subscription to the paid version

Reconciling your billing after converting a trial subscription into the paid version requires a systematic review of your billing records. This approach ensures accuracy and proper accounting.

Key concepts of reconciling free trial and paid subscription

Identify the conversion date: Determine the exact date when the subscription was converted to paid version. This date marks the transition point from the trial version to the paid version and the prorated refunds and charges are calculated from this date.

Charge cycle: Typically 30 or 31 days, but 28 or 29 for February for monthly billed subscriptions. It starts from your initial purchase date or when renewal or recurring charges begin. For annual subscriptions, the cycle charge is 365 days (366 in leap years). To learn more about how charge cycles are determined, see new commerce charge cycle.

Daily rate: Unit price ÷ total days in the charge cycle.

Prorate charge cycle or billing days: Number of days from the upgrade until the end of the charge cycle.

Effective unit price: Daily rate × billing days.

Calculate prorated charges and refunds:

For the trial subscription: Compute the refund for the period from the conversion date to the end of the charge cycle. Use the formula:

  • Refund = Effective unit price × license count. However, the refund is always zero because the subscription is a free trial with zero cost. This step is actually to close out the trial subscription.

For the paid subscription: Calculate the charge from the conversion date to the end of the charge cycle using the same formula.

  • Charge = Effective unit price × license count.

Total refunds and charges might change due to taxes, exchange rates, and other adjustments.

Scenario:

Suppose you started a free trial for 25 "Dynamics 365 Guides" licenses on June 25, 2021. The trial lasts for one month, ending on July 25, 2021. You can switch to a paid version anytime during or after the trial. However, you converted to a paid version on June 30, 2021.

  • June 25: Initial purchase of 25 licenses of a "Dynamics 365 Guides" subscription at USD 0/month (free trial).
  • June 30: Updated to the paid version for the same number of licenses at USD 52.61/month.
  • Charge cycle: June 25 to July 24 (30 days total) since June has 30 days.
  • Unit price: 0 (indicating it's a free trial).
  • Remaining days or prorated billing day after conversion: 25 days (June 30 – July 24).

Billing process:

  1. Initial trial purchase (June 25- July 24):

    You're initially charged zero amount for "Dynamics 365 Guides" from June 25 to July 24 because it's a trial version. This entry has some distinctive characteristics, such as the ProductQualifiers field includes ["Trial"] to mark this purchase as a trial subscription.

    Total charge: 25 licenses × USD 0 per license (trial price) = USD 0 total cost

  2. Close out the trial subscription for the unused period (June 30- July 24):

    After you convert the subscription to paid version on June 30, a refund is issued for the unused portion of "Dynamics 365 Guides" from June 30 to July 24. This line item is a conversion entry that closes out your trial subscription.

    Daily rate: USD 0 (trial price) ÷ 30 days = USD 0 per day

Remaining period: 25 days (June 30 to July 24)

Unused license count: 25 becuse you converted those licenses to paid version

Effective unit price: USD 0 × 25 days = USD 0 per license

Total refund: USD 0 × 25 licenses = USD 0

  3. Charge for paid subscription (June 30- July 24):

    This line item is the conversion entry that initiates your paid subscription. You're billed for "Office 365 E1" from June 30 to July 24.

    Daily rate: USD 52.61 ÷ 30 days = USD 1.753666667 per day

Same remaining period: 25 days (June 30 to July 24)

Same license count: 25 becuse you upgraded all licenses to paid version

Effective unit price: USD 1.753666667 × 25 days = USD 43.84166667 per license

Total charge: USD 43.84166667 × 25 licenses = USD 1096.00 (rounded down to two decimal places)

Reconciliation line items for June billing period after the trial to paid conversion:

OrderDate ChargeType UnitPrice ChargeStartDate ChargeEndDate EffectiveUnitPrice BillableQuantity ProductQualifiers Total
June 25, 2021 new 0 June 25, 2021 July 24, 2021 0 25 ["Trial"] 0
June 30, 2021 convert 0 June 30, 2021 July 24, 2021 0 25 ["Trial"] 0
June 30, 2021 convert 52.61 June 30, 2021 July 24, 2021 52.61 25 1,096.00

By following this reconciliation process, manage and verify the charges associated with converting a trial subscription to a paid one. This systematic approach ensures transparency and accuracy in your billing records.

Reconcile billing line items after changing billing plans

Think of billing plan changes like switching from annual to monthly payments on a three-year car lease, the total commitment remains the same, but the payment structure changes. Let's explore how this change of billing plan works with respect to CSP billing and invoice reconciliation.

You can switch your billing plan after the first charge cycle ends. For instance, if you initially opted for yearly payments, you could change to monthly payments after one year, at the end of the first charge cycle or the first year.

Key concepts of switching billing plans of a subscription

Identify the billing plan switching date: Determine the exact date when the subscription was converted to a paid version. From this date, the prorated refunds and charges are calculated.

Charge cycle: Typically 30 or 31 days, but 28 or 29 for February for monthly billed subscriptions. It starts from your initial purchase date or when renewal or recurring charges begin. For annual subscriptions, the cycle charge is 365 days (366 in leap years). To learn more about how charge cycles are determined, see new commerce charge cycle.

Calculate the monthly rate equivalent: If the monthly rate is USD 21 per license, over 12 months, the cost is USD 252 annually. However the standard annual rate is USD 240, there's a slight discount for committing annually.

Daily rate: Unit price ÷ total days in the charge cycle.

Prorate charge cycle or billing days: Number of days from the change until the end of the charge cycle.

Effective unit price: Daily rate × billing days.

Total: Effective unit price x license count.

Total charges might change due to taxes, exchange rates, and other adjustments.

Important

Switching your billing plan only changes the billing frequency and amount for the charge cycle, not the subscription start date and end date.

Scenario:

Let's say you purchased 10 licenses of a three-year "Dynamics 365 Commerce" subscription on September 20, 2021, with an annual billing plan. You switched to a monthly billing plan on September 20, 2022. The next month, in October 2022, your bill showed a monthly charge. Later on, March 20, 2023, you changed your billing plan back to an annual billing plan.

  • September 20, 2021: A user initially purchased 10 licenses of triennial (three-year) "Dynamics 365 Commerce" subscription with an annual plan at USD 240 each, totaling USD 2,400 annually.
  • September 20, 2022: Switches to a monthly plan at USD 21 per license, making the monthly payment USD 210.
  • March 20, 2023: Switch back to an annual plan at USD 240 per license.

Billing process:

  1. Initial trial purchase (September 20, 2021 - September 19, 2022):

    You start with 10 licenses at USD 240 each for a full one year cycle. This calculation is straightforward - you pay the full price because you're using the licenses for the entire period:

    USD 240 per license × 10 licenses = USD 2,400 total

  2. Switched from annual billing plan to monthly on September 20, 2022 (September 20, 2022 - October 19, 2022):

    When you switch to monthly billing in September 2022, the system creates a conversion record that reflects your new payment structure

    Monthly rate per license: USD 21

Total monthly cost: USD 21 x 10 licenses = USD 210

  3. Switched from monthly billing plan to annual on March 20, 2023 (March, 20 2023 - September 19, 2023):

    The process works similarly in reverse, but with an interesting pricing adjustment. The system prorates the annual cost.

    Daily rate: USD 240 ÷ 365 days = USD 0.657534247 per day

Same remaining period: 214 days (March 20, 2023, to September 19, 2023)

Same license count: 10 

Effective unit price: USD 0.657534247 × 214 days = USD 120.9863014 per license

Total charge: USD 120.9863014 × 10 licenses = USD 1,209.80 (rounded down to two decimal places)

Tip

  • Check the ChargeType: Ensure it's set to "convert" to indicate a billing plan change.
  • Confirm BillingFrequency: Check that it reflects the new billing plan (annual or monthly).
  • Review EffectiveUnitPrice: Understand that the EffectiveUnitPrice may be a prorated value, reflecting adjustments for the remaining period and any applicable discounts.

Reconciliation line items when you switch billing plan:

ChargeType BillableQuantity UnitPrice EffectiveUnitPrice Total ChargeStartDate ChargeEndDate BillingFrequency
new 10 240 240 2,400 September 20, 2021 September 19, 2022 Annual
convert 10 21 20 210 September 20, 2022 October 19, 2022 Monthly

By applying these principles and understanding, manage and reconcile billing changes when you change your billing plans.

Validate charges in legacy and new commerce reconciliation data after migrating to new commerce

When you switch from legacy to a new commerce subscription within a billing period, you receive two invoices.

First, you get a refund for the amount paid in advance. Rest assured; your service remains uninterrupted after migration.

To clarify this process, let's break down an example:

Suppose you purchased one license of an annual Microsoft Office 365 E3 legacy subscription on July 21, 2021, with a monthly billing plan. On January 24, 2022, you migrated to a corresponding new commerce subscription with the same billing term and billing plan.

Here's how the billing works:

  • The legacy invoice covers charges up to and including January 23, 2022.
  • From January 24, 2022, onward, your new commerce subscription charges appear on the new commerce invoice.

Important details

Number of licenses: One

Monthly unit price of a license: USD 16

Legacy billing anniversary date: 21st day of each month

This streamlined approach ensures clarity and continuity in your billing, making your migration as smooth as possible.

Legacy license-based invoice reconciliation line items:

ProductName ChargeType UnitPrice SubscriptionStartDate SubscriptionEndDate BillingFrequency ChargeStartDate ChargeEndDate
Microsoft Office 365 E3 Prorate fees when purchase 16 July 21, 2021 July 2, 2022 Monthly January 2, 2022 February 20, 2022

New commerce invoice reconciliation line items of January 2022 billing period:

For the January billing period, charges are divided between legacy and new commerce invoices on a prorated basis.

ProductName ChargeType UnitPrice EffectiveUnitPrice SubscriptionStartDate SubscriptionEndDate BillingFrequency ChargeStartDate ChargeEndDate
Microsoft Office 365 E3 new 16 13.93 January 25, 2022 July 20, 2022 Monthly January 25, 2022 February 20, 2022

Here's how your bill changes if you switch to an annual billing plan:

New commerce invoice reconciliation line items of January 2022 billing period:

ProductName ChargeType UnitPrice EffectiveUnitPrice SubscriptionStartDate SubscriptionEndDate BillingFrequency ChargeStartDate ChargeEndDate
Microsoft Office 365 E3 new 192 93.10 January 25, 2022 July 20, 2022 January 25, 2022 July 20, 2022

When you switch to a new annual billing term and make an upfront payment during migration, you see these line items.

New commerce invoice reconciliation line items of January 2022 billing period:

ProductName ChargeType UnitPrice EffectiveUnitPrice SubscriptionStartDate SubscriptionEndDate BillingFrequency ChargeStartDate ChargeEndDate
Microsoft Office 365 E3 new 192 192 January 25, 2022 January 24, 2023 January 25, 2022 January 24, 2023

When you switch to a new annual billing term and a monthly billing plan during migration, you see these line items.

New commerce invoice reconciliation line items of January 2022 billing period:

ProductName ChargeType UnitPrice EffectiveUnitPrice SubscriptionStartDate SubscriptionEndDate BillingFrequency ChargeStartDate ChargeEndDate
Microsoft Office 365 E3 new 16 16 January 25, 2022 January 24, 2023 Monthly January 25, 2022 February 24, 2022

Embrace this opportunity to streamline your financial planning and maximize your resources.

Verify the license-based subscription transfer between partners (P2P transfer) in reconciliation files or line items

Think of a P2P transfer like moving your cell phone service from one carrier to another while keeping your same plan and phone number. Just as you need to verify both the cancellation with your old carrier and activation with the new one, you also need to check both the source and target partner's reconciliation files or line items.

To verify the license-based subscription transfer between partners (P2P transfer) in reconciliation files or line items, follow these detailed steps. This process ensures transparency and accuracy when subscriptions are migrated or transferred from one partner to another. For more information about the transfer, see transfer new commerce license-based subscriptions from one transacting CSP partner to another.

Verification checklist based on this scenario

Scenario:

Initially, the source partner (Partner A) had an annual subscription (SubscriptionId: 8691daa7-4760-4b4a-c193-8c1755b44ab5) starting on May 10, 2024, with a monthly payment of USD 45.60 for three licenses. The regular billing cycle ran from the 10th of each month to the 9th of the next month.

On November 1, 2024, they transferred the subscription to the target partner (Partner B). The reconciliation files or line items reflect several key changes post-transfer:

Understand the transfer process

  • A subscription transfer involves two main steps:

    • Cancellation of the subscription with the source partner.
    • Repurchase of the subscription with the target partner.

  • SubscriptionId changes after the transfer, but key properties like autorenewal settings remain consistent.

For the source partner (Partner A)

  1. Check subscription cancellation:

    • Look for the ChargeType attribute listed as "cancelImmediate" for the transferred subscription.
    • Verify the OrderDate matches the effective cancellation date or the transfer date.

  2. Verify subscription dates:

    • Ensure that SubscriptionStartDate and SubscriptionEndDate remain unchanged, reflecting the original billing term.

  3. Review prorated refund:

    • Check the ChargeStartDate and ChargeEndDate for the canceled subscription. These dates should reflect the period from the transfer date to the end of the charge cycle. If the subscription is transferred on November 1, 2024, the prorated refund should reflect the period from November 1, 2024, to November 9, 2024 (the end of the charge cycle).
    • Verify the EffectiveUnitPrice is prorated based on the number of days remaining in the charge cycle. For more information, see how prorated charges or refunds are calculated.

  4. Final charge period:

    • Ensure that the final charge period only covers the partial month (for example, October 10-31, 2024).

For the target partner (Partner B)

  1. Check new subscription creation:

    • Confirm that a new subscription ID is generated for the transferred subscription SubscriptionId: 5d3a7501-3b4a-4012-db07-ebc4192985b7.
    • Look for a new entry with ChargeType as "new" in the reconciliation line item.
    • Verify the OrderDate matches the transfer date.

  2. Verify subscription dates:

    • Ensure the SubscriptionStartDate aligns with the transfer date, and the SubscriptionEndDate matches the end of the original billing term (for example, May 09, 2025).

  3. Review prorated charges:

    • Check the ChargeStartDate and ChargeEndDate for the first billing period. These dates should reflect the prorated period from the transfer date to the end of the first charge cycle (for example, November 1-9, 2024).
    • Verify the EffectiveUnitPrice, which should be prorated based on the number of days in the first billing cycle. For more information, see how prorated charges or refunds are calculated.

  4. Regular monthly billing:

    • Confirm that regular monthly billing of USD 45.60 per license begins from the correct date (for example, November 10, 2024).

General verification

  • Subscription properties:
    • Confirm that key settings like autorenewal are preserved and carried over to the target partner (Partner B).
  • Charge cycle continuity:
    • Ensure that the charge cycle remains unchanged (for example, monthly).
  • License quantity:
    • Verify that the number of licenses (for example, 3) remains the same with the target partner (Partner B).
  • Duplicate or overlapping charges:
    • Ensure no gaps or overlaps in billing between the source and target partners. Billing for the target partner should start from the transfer date, with refunds for the source partner also starting from the transfer date.

Key points to remember

  • Subscription ID changes: The subscription ID changes when transferred from the source to the target partner.
  • Prorated charges: Prorated charges are based on the number of days in the partial charge cycle. For example, if the transfer occurs on the 10th, the prorated charge would be calculated for the remaining days in the charge cycle.
  • Accurate billing cutover: Billing starts on the transfer date for the target partner, and refunds for the source partner also begin then, preventing overlapping or duplicate charges.
  • Consistent Subscription Dates: The overall subscription term remains consistent, with the SubscriptionStartDate and SubscriptionEndDate reflecting the original billing term.
  • Charge types: Look for "cancelImmediate" for the source partner and "new" for the target partner to identify the transfer.
  • Customer notification: Ensure that the customer is notified of the partner change and that there's no disruption to their service.

Billing process for the source partner (Partner A):

  1. Initial purchase (May 10 - June 9):

    You start with three licenses at USD 45.6 each for a full month charge cycle. This calculation is straightforward - you pay the full price because you're using the licenses for the entire period:

    Total charge: 3 licenses × USD 45.6 per license = USD 136.8 total (rounded down to two decimal places)

  2. Regular cycle charge for October (October 10 - November 9):

    Your regular cycle charges continued until the October billing period.

    Total charge: 3 licenses × USD 45.6 per license = USD 136.8 total (rounded down to two decimal places)

  3. Transfer the subscription (November 1 - November 9):

    Refund the current three licenses, as the transfer initiates subscription cancellation, which in turn triggers a refund.

    Daily rate based on October charge cycle: 45.6 ÷ 31 days = USD 1.4709677419 per day

Remaining period: 9 days (November 1 to November 9)

License count: 3 (Transferred subscription has three licenses)

Effective unit price: USD 1.4709677419 × 9 days = USD 13.23870968 per license

Total charge: USD 13.23870968 × 3 licenses = USD 39.69 (rounded down to two decimal places)

Billing process for the target partner (Partner B):

  1. Charges after transfer (November 1 - November 9):

    After the target partners accepted the subscription transfer, the target partner is billed only for the remaining 9 days (November 1 – November 9) in the October charge cycle to avoid any billing overlap or gap.

    Same Daily rate: 45.6 ÷ 31 days = USD 1.4709677419 per day

Remaining period: 9 days (November 1 to November 9)

Same license count: 3 (Transferred subscription has three licenses)

Effective unit price: USD 1.4709677419 × 9 days = USD 13.23870968 per license

Total charge: USD 13.23870968 × 3 licenses = USD 39.69 (rounded down to two decimal places)

  2. Regular cycle charge from November (November 10 - December 9):

    Your regular cycle charges continued until the October billing period.

    Total charge: 3 licenses × USD 45.6 per license = USD 136.8 total (rounded down to two decimal places)

Reconciliation line items after P2P transfer:

Billing period PartnerId CustomerName OrderDate ProductName ChargeType UnitPrice BillableQuantity Subtotal TaxTotal Total Currency SubscriptionId ChargeStartDate ChargeEndDate EffectiveUnitPrice SubscriptionStartDate SubscriptionEndDate
First billing period 11111111-aaaa-11aa-aa11-111111111111 Contoso May 10, 2024 Microsoft 365 E3 new 45.6 3 136.8 0 136.8 USD 8691daa7-4760-4b4a-c193-8c1755b44ab5 May 10, 2024 Jun 09, 2024 45.6 May 10, 2024 May 09, 2025
Billing period before the transfer 11111111-aaaa-11aa-aa11-111111111111 Contoso Oct 10, 2024 Microsoft 365 E3 cycleCharge 45.6 3 136.8 0 136.8 USD 8691daa7-4760-4b4a-c193-8c1755b44ab5 Oct 10, 2024 Nov 09, 2024 45.6 May 10, 2024 May 09, 2025
Billing period after the transfer 11111111-aaaa-11aa-aa11-111111111111 Contoso Nov 01, 2024 Microsoft 365 E3 cancelImmediate 45.6 3 –39.69 0 –39.69 USD 8691daa7-4760-4b4a-c193-8c1755b44ab5 Nov 01, 2024 Nov 09, 2024 –13.23870968 May 10, 2024 May 09, 2025

By reviewing and verifying these key elements, ensure that the P2P transfer process is accurately reflected and accounted for in your reconciliation files or line items.

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