**Founder Edition**

Puzzle takes the money you receive for a yearly subscription and spreads it out over the year, counting a little bit each month.

For example, if you buy a $12 yearly subscription starting on October 1, Puzzle thinks of it as making $1 each month. So, it counts $1 for October, $1 for November, and keeps going until it adds up to $12 after a year.

But if you start the same $12 subscription on October 15, Puzzle counts it a little differently. For the first month, it only counts 50 cents, because you're starting in the middle of the month.

So it wouldn't be fair to count the whole $1 for that first October.

And just to keep the math simple, Puzzle pretends that every month has 30 days.

So, for Puzzle, a year is not 365 days but 360 days (that's 30 days times 12 months).

**Accountant Edition**

A more technical answer (if you’re an **accountant)**

Puzzle calculates revenue based on the following convention:

30 days per month, which results in 360 days for the year (30 days x 12 months)

Puzzle uses this model to automatically calculate the pro-rated amount of revenue to be recognized in any given period, with a prorated first month.

Example:

**A customer signs up for a subscription**

Your customer, David Sacks, signs up for a monthly (30 day) subscription on September 26 for $2.00.

The value of this subscription is $2 per month.

**What happens in September**

Revenue needs to be prorated as the subscription was not purchased until September 26.

The first month amortization should be $2 * 5 days/30 days = $0.32

**What happens in October**

In the next month, the amortization is the total amount of the subscription ($2) less the amount recognized in September = $1.68.

**Tell me more about the amortization**

Puzzle’s revenue amortization is cumulative. This means the rounding is handled over the course of the entire amortization period. Some months may not have the exact same amortization amount.

Example:

*Take a $100 contract that needs to be recognized over 12 months.**The first month amortization is $100 * 1/12 = $8.33.**The second month cumulative amortization is $100 * 2/12 = $16.67. This means the monthly amortization is $16.67 - $8.33 = $8.34, which is $0.01 different from the first month.*