Hey @Pridentt
When a merchant downgrades to a cheaper plan, Shopify automatically prorates the charges using a specific formula.
For example, If a merchant begins a 30-day billing cycle on a $20.00 plan, and then downgrades to a $10.00 plan on day 15, the proration calculation works like this:
($20.00 - $10.00) * (15/30) = $5.00
This means the merchant receives a $5.00 credit for the unused portion of their higher-priced plan. The formula takes into account both the price difference between plans ($10) and the time remaining in the billing cycle (15 days out of 30), ensuring merchants only pay for what they actually use.
You can find the complete details about how subscription proration works in the documentation: About subscription billing