What is standalone selling price (SSP)?
Standalone selling price (SSP) is the price at which a company would sell a promised good or service separately to a customer. Under ASC 606 and IFRS 15, a contract's total price is allocated to its separate performance obligations in proportion to their standalone selling prices, which decides how much revenue is recognised for each and when.
Also calledSSPstand-alone selling pricerelative SSP allocation
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- Used for
- Allocating the transaction price
- Standards
- ASC 606 / IFRS 15
- Estimate methods
- Market, cost plus margin, residual
How standalone selling price works
The best evidence of SSP is the observable price when the company sells the item on its own to similar customers. Where that does not exist, the standards allow estimates: the adjusted market assessment approach, which looks at what the market would pay; the expected cost plus a margin; or, only in limited cases such as highly variable or uncertain prices, the residual approach, which takes the total price less the SSPs of other items. Companies often set SSP as a range per product and region and review it regularly. Allocation matters when items are delivered at different times: a bundle of a software licence, implementation and support needs a split that moves some revenue into later periods. Discounts are allocated across all obligations unless they clearly relate to only some. RightRev and Trullion calculate SSP-based allocations.
Common questions
How is standalone selling price determined?+
From observable prices when the item is sold separately. Otherwise it is estimated, using an adjusted market assessment, expected cost plus a margin, or, in limited cases, the residual approach.
When can the residual approach be used?+
Only when the selling price of the item is highly variable or uncertain, for example because it has not yet been sold separately or prices vary widely between customers.
Why does SSP matter for a bundle?+
Because the bundle price is split across its items in proportion to their SSPs, which decides how much revenue is recognised upfront and how much over time.
Software that allocates revenue by SSP
Part of Accountio’s accounting technology coverage · Glossary
