proration

Proration is the act of allocating an amount—such as a charge, credit, or liability—proportionally based on a specific basis, most commonly time or usage. The goal is to assign a fair share when a service, property, or obligation begins partway through a billing period or is shared among multiple parties.

Common applications include rent and utilities when occupancy starts or ends within a billing cycle; subscription services that begin midway through a billing period; payroll and benefits when employment begins or ends mid-period; taxes or insurance premiums split among jurisdictions or owners; and cost-sharing in co-ownership arrangements.

Calculation typically involves determining the portion of the period or usage to be charged or credited, and applying a proportion to the total amount. A standard method uses days: daily rate equals the total price divided by the days in the period, and prorated charge equals the daily rate times the days used. Rounding rules may affect the final amount.

Example: A monthly rent of $1,200 for a 30-day cycle; a tenant moves in on the 11th. Days charged = 20 days. Prorated rent = 1,200 × 20/30 = 800 dollars.

Proration can be governed by contract terms, lease provisions, or local regulations; inaccuracies or disputes may arise if the chosen basis (days, hours, units) or rounding is inconsistent. Related concepts include pro rata allocations and prorated shares.