📅 What is "month" in monthly subscription - 30 days, calendar month? When to charge?
I want to introduce monthly subscriptions paid by credit card. But months aren't equal. So what should I consider as a month? And when should I charge?
"month" = 30 (31?) days
You buy subscriptions on February 12. You pay February 12, March 14, April 13, etc.
âž– Cons:
- Someone complains that it's not really a month.
- Every month payment is on a different day. Is it problematic for corporate accountants? 🤔
"month" = calendar month
You buy subscriptions on February 12. You pay February 12, March 12, April 12, etc.
âž– Cons:
- What if you buy on February 29 on a leap year? 🤯
"month" = calendar month, but you always pay on 1st day of a month
You buy subscriptions on February 1. You pay February 1, March 1, April 1, etc.
âž– Cons:
- What about a free trial? It would have a different length for each customer.
- What if you want to buy in the middle of the month?
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I think there's some industry standard that's already been set here so you might not have to reinvent the wheel in terms of policy: https://stripe.com/docs/billing/subscriptions/billing-cycle
"A customer with a monthly subscription set to cycle on the 2nd of the month will always be billed on the 2nd.
If a month doesn’t have the anchor day, the subscription will be billed on the last day of the month. For example, a subscription starting on January 31 bills on February 28 (or February 29 in a leap year), then March 31, April 30, and so on."
Agree with @saasypants, which is kinda funny to say and probably the point of the handle :)
One thing I would add, in some situations, companies have gone for "we bill always on the 1st of the month", like some mortgage models. They prorate the first payment so if you sign up on the 15th, you pay for 15 days then pay for the month on the 1st of the next month.
Given how good Stripe has made this and how easy it is to handle the above billing cycle, I think you'd have to have a reason to go for anything else
This is better than what we did with our 'home rolled' subscription billing system using Authorized.net CIM (original code written 2010). For the 'end of the month' subscribers that signed up on the 31st, we would bill on the 30th the next 'short' month. We would then continue to bill on the 30th. Eventually, the bulk of our 4K subscribers in the last part of the month all fired off on the 28th.