This page describes how Chargify handles billing for the Chargify service. It covers how we bill for the new pricing plans (launched Feb 1st, 2017), which are based on charging a percentage of revenue that you bill through Chargify.
The aspects of usage that we consider when determining your bill depend on the plan to which you are subscribed. In general, we consider the following aspects of usage:
- Your base plan fee
- The volume of card-based payments you have billed through Chargify (i.e. your “revenue”)
- The number of prompted-payment invoices (i.e. non-automatic billing invoices) you issue
- The number of non-card payments (ACH or Manual) you collect
- The number of non-paying (free) subscribers you maintain
The base plan is paid in advance. All other aspects are considered “usage” and are billed in arrears.
We lock in your usage before you are billed. This gives you a chance to review our calculations if you wish. The calculation happens about 2 days before your billing date and considers all activity in your usage window.
Your usage window ends at noon Eastern time between 2 and 3 days (at least 48 hours but no more than 72 hours) before your billing date. For example:
- If your renewal billing date is Jan 6th at 2:00PM Eastern time, then your usage window ends at Jan 4th at noon Eastern time
- If your renewal billing date is Jan 6th at 1:00AM Eastern time, then your usage window ends at Jan 3rd at noon Eastern time
Your usage window begins either when your last usage window ended or, in the case where you had no previous usage window (i.e. if you had just signed up or just converted to one of our new plans), at the start of your billing period (i.e. the time you signed up or converted to the new plan). When counting revenue, payments, and invoices, we remember the ones included in the previous usage window so that none are double counted, even if an item coincides in time with the edge of your usage window.
We report your usage in two places for your review:
- A summary is shown as a line item on your statement
- Usage details are shown in the “Billing & Plans” section of your account
The statement line item shows both the count of your usage and the amount we billed for it. For example, if you bill $100,000 through Chargify from January 1st to January 31th, your February 1st statement will have a line item indicating 100,000 dollars billed and a corresponding charge (assuming a plan that charges 1.2% of revenue) of $1,200.
We also have a section on the “Billing & Plans” section of your account that lists all of the transactions, invoices, or subscribers that we counted to arrive at your total usage for each Statement.
Note: Since your usage window is tied to your billing date and does not always represent an entire month of data, we don’t recommend trying to use this report as a financial tool for your business. We provide other tools for that purpose!
The process to calculate your revenue for billing purposes is as follows:
- All successful card-based payments (i.e. from credit cards and PayPal) you received during the usage window are selected to form your set of card payments.
- All successful card-based refunds run through Chargify and your gateway are selected to form your set of card refunds.
- Your revenue usage is calculated by subtracting the sum of the card refunds from the sum of card payments.
- If necessary, revenue usage is converted to USD before being recorded. (See currency conversion below.)
- Declined payments are omitted from card payments - you are not charged by Chargify for having failed or declined transactions!
- Manual/External payments are omitted from card payments - these are counted under a separate usage statistic.
- Manual/External refunds are omitted from card refunds
- You cannot have a negative revenue number for any usage window. If your refunds are larger than your payments in any window, we truncate the revenue value to 0 and you are not given a credit.
- Refunds are monitored for abuse. Any merchant attempting to “game” refunds to avoid paying fees for their valid payments is in breach of our Terms of Service.
We simply count the number of prompted-payment invoices created during the usage window.
We simply count the number of ACH or manual external payments you record during the usage window.
We count the number of Active or Trialing subscriptions that are not collecting revenue that exist at the end of the usage window. Canceled subscriptions are omitted from this count.
All revenue is converted from the site currency to USD before we record the usage. We pull exchange rates daily from Open Exchange Rates. Then, we use the latest exchange rates we have when calculating your revenue usage to convert your site’s total revenue to USD.
We aggregate all of your usage across all of your live sites. When conversion (such as currency conversion) is necessary, we first sum the usage for each site, perform the conversion for each site, then sum all of the converted values to arrive at the total Usage.
Our tiered pricing model is based on how many subscribers you manage through Chargify:
Someone who paid you for the current month is a subscriber. For instance, if you charge someone $25/month, then we’re going to count them as your subscriber each month. And if you charge them once for a whole year of service (a product that has a 12-month billing cycle), then we’re going to count them each month, because they paid you for all 12 months.
Someone who owes you for the current month is a subscriber. For instance, if we’re trying to collect payment from someone in June and July before giving up and cancelling them, they will be counted as customers in June and July. You can change your Retry & Dunning settings to shorten the time we spend trying to collect, if that makes more sense for your business.
Someone subscribed to your free product is not a subscriber. A free product is one that is completely free (it has a $0 recurring charge, $0 setup fee, $0 trial fee).
About Free Trials on Paid Products:
- Users DURING a free trial period of a paid product do not count, but when the free trial ends and they convert to active & paying subscribers, they DO count.
- When someone uses up his free trial on your product, we start trying to collect payment from them because they have entered the paid portion of your product. When we start trying to collect, they become your customer.
- TIP: if your business has a lot of free trial users who probably won’t convert to paid customers, then you should set up two separate products: one that’s completely free (like 30 or 60 days free with no paid portion at all) and another that’s your paid product (with no trial period built in).
- For the people who want to upgrade to your paid product, use our upgrade function to move them from your free trial product to the paid product. This will result in us only counting those people who end up on the paid product.