Standalone selling price (SSP)

When a contract has more than one performance obligation, the total transaction price has to be split between them. ASC 606 requires that split to be made in proportion to standalone selling price — what each element would sell for on its own.

Worked example

A $90,000 bundle contains a subscription with an SSP of $80,000 and implementation with an SSP of $20,000. Combined SSP is $100,000, so the customer received a 10% bundle discount. The allocation:

• Subscription: $80,000 ÷ $100,000 × $90,000 = $72,000
• Implementation: $20,000 ÷ $100,000 × $90,000 = $18,000

Note what this prevents. A vendor cannot assign the entire discount to implementation — recognised immediately — in order to pull revenue forward, nor assign it entirely to the subscription to push revenue back. The allocation is proportional regardless of where the negotiation happened.

Establishing SSP when you never sell it separately

The standard’s preference is observable prices from standalone sales. Where those do not exist — and for many SaaS bundles they do not — acceptable approaches include:

• Adjusted market assessment — what the market would bear, referencing competitors.
• Expected cost plus margin.
• Residual approach — total price less the SSPs of the other elements. This is permitted only in narrow circumstances, essentially where pricing is highly variable or uncertain.

Keep the evidence

SSP determinations must be documented, applied consistently, and revisited periodically. A defensible SSP analysis usually rests on a maintained price book and a discounting record showing the range of prices actually achieved — which is another reason discounts are better captured as structured overrides than as edited prices nobody can query.