In some circumstances, the first payment for a membership will be a prorated sum. This will occur when the first period of membership is shorter than the regular, recurring period.
Pro-rata calculations are only ever applied to the first membership period, and do not apply if the membership is:
- Set to recur on the monthly anniversary date
- or, starts on the same day of the month as the monthly recurring payment date
The calculation formula
Let’s take an example where the membership is setup to recur monthly with payment always on the 1st day of the month.
We set our membership to start on a future date, on 4th of the month.
Upon setting up the membership, the system will issue grace credits for the first period (if selected). Only the joining fee will be charged at that point. No charge is made if there is no joining fee.
Come the start date on 4th, the system will charge the membership as part of the overnight payment run.
The first payment period will be 4th to 1st. Subsequent payment periods will be 1st to 1st.
The prorated amount is calculated by calculating the number of hours between the start date and the next payment date. A further calculation is made to calculate the number of hours between the second payment and the third payment (the “regular” duration period).
The prorated amount charged will be:
(Hours until next payment ÷ Hours in regular period) x Regular cost
If the second period month was 30 days, the resulting calculation would be ( ( 24 x (30 – 4) ) ÷ (24 x 30) ) x Regular cost = 0.87 x Regular cost
As month lengths vary, this calculation may vary marginally from month-to-month. Our approach is the one we consider to be the “fairest” and “most balanced” between member and facility.
Note: Calculations are performed to the hour. This means for memberships starting immediately, with a prorated first payment, that payment amount would naturally vary during the day for different memberships started that same day.