Critical Issue: APPLY_ON_NEXT_BILLING_CYCLE Causing Significant Revenue Loss

[abueler]

We’re experiencing a serious issue with the APPLY_ON_NEXT_BILLING_CYCLE functionality that’s causing substantial revenue loss for our app.

Here’s the scenario:

1. Merchant signs up for our discounted yearly subscription plan
2. Merchant switches to a monthly plan
3. Despite implementing APPLY_ON_NEXT_BILLING_CYCLE, the system:

• Immediately cancels the current yearly subscription
• Issues a refund to the merchant
• Activates the new monthly plan instantly

This behavior contradicts the expected functionality where the change should only take effect at the next billing cycle. We’re essentially losing the difference between the discounted yearly rate and the refund amount every time this happens.
Technical Details:

• Using the latest Billing API
• Properly implementing APPLY_ON_NEXT_BILLING_CYCLE parameter
• Confirmed this is happening in production, not just test mode

Questions for the Shopify Team:

• Is this a known issue?
• Is there any workaround available?
• When can we expect this to be fixed?

This is causing significant financial impact to our business and undermining our pricing strategy. Any assistance would be greatly appreciated.

[abueler]

After more testing I found out what exactly the problem is and how to reproduce it. It’s described in this newer ticket:

Loophole in Shopify Billing API: Merchants Exploiting Annual Subscription Discounts

I’m facing an issue with our app’s annual subscription model that’s causing revenue loss through what appears to be a Shopify billing system loophole. The issue: Merchant subscribes to our annual plan (with a 30% discount) Later, they uninstall the app (canceling current subscription) Merchant reinstalls the app and selects a cheaper monthly plan Shopify immediately issues a prorated refund for the unused portion of the annual plan This differs from normal plan changes where APPLY_ON_NEXT_BI…