Premium support is a SaaS line item that is often quoted as a percentage of the subscription. That makes the percentage a natural first guess for its standalone selling price, but a pricing rule is not SSP evidence on its own. This post covers when a support tier is a separate performance obligation, when a percentage of the subscription is a fair SSP and when a cost build is better, how support is recognised, and what evidence belongs in the file. The worked example is an $84,000.00, 24-month contract with a standard and a premium support tier, run through the Soluqube engine; the ASC 606 SSP allocation guide covers the wider method. Key terms: standalone selling price, performance obligation and series guidance.
Is premium support a separate performance obligation?
Usually, yes, when the customer chooses and pays for it. Premium support is a promise to stand ready to answer tickets within a set time over the term. The customer benefits from it alongside the software, and it does not modify the software, so it normally passes the distinct test in ASC 606-10-25-19 to 25-21.
ASC 606-10-25-18(e) lists standing ready to provide goods or services as a promise in its own right. Because each period of support is substantially the same and transfers in the same way, a support tier is usually accounted for as a series under ASC 606-10-25-14(b) and 25-15. Signs that a tier is distinct include:
- It is sold as a separate tier, or added to some contracts and not others.
- The customer can use the software without it.
- It changes response times or coverage, not the software itself.
Basic help included in every subscription at no extra charge is a different case. It may be part of the subscription service rather than a separate promise, so assess it on its own facts.
Should premium support SSP be a percentage of the subscription?
Only if the evidence supports the percentage. A percentage of the subscription is a convenient way to express SSP, but ASC 606-10-32-32 calls the price of standalone sales the best evidence. If customers actually pay a consistent percentage when they buy or renew support on its own, that observed percentage is a fair SSP.
If the percentage is only a list-price rule that most deals discount, it is weak evidence. ASC 606-10-32-33 asks for an estimate that uses as many observable inputs as possible, and 32-34(a) allows an adjusted market assessment built from what the market pays for similar support. A percentage drawn from renewals where support is bought separately is often the strongest data a SaaS company has.
Two practical points apply:
- The percentage should be applied to the subscription's SSP, not to a discounted contract price, or the discount is counted twice.
- Record the percentage, the deals it comes from and the date it was set, so a reviewer can trace it. See observable price.
When is expected cost plus margin the better method?
Expected cost plus margin is the better method when support is never sold on its own and no market data exists. ASC 606-10-32-34(b) allows forecasting the cost of providing the tier, such as support staff time, tooling and on-call cover, and adding a margin consistent with the company's other services.
A cost build suits a new premium tier with a one-hour response commitment, because there are no renewals yet to observe. It also works as a cross-check on a percentage: if the percentage implies a margin far from the company's other services, the file should explain why. See expected cost plus margin.
ASC 606-10-32-35 allows methods to be combined, so a company can start with a cost build and move to observed renewal prices once enough standalone sales exist. Document the change and the date it took effect.
How is premium support recognised over the term?
Premium support is usually recognised ratably over the support term. The customer receives and consumes the benefit of the stand-ready service as the vendor provides it, which meets the over-time criterion in ASC 606-10-25-27(a). Equal monthly amounts are a reasonable measure of progress when support is available evenly across the term.
Recognition follows the support term, not the invoice. If three years of support are billed upfront, the amount stays in deferred revenue and is released month by month. If usage is heavily uneven, for example a tier that includes a fixed number of escalations, consider whether a different measure of progress fits better. See ratable recognition.
How is premium support allocated on an $84,000 contract?
Take an $84,000.00, 24-month contract starting March 2027: a subscription, standard support, premium support (24x7, 1-hour SLA) and onboarding, with SSPs totalling $99,600.00. The Soluqube engine spreads the $15,600.00 discount pro rata, allocating $6,072.29 to standard support and $12,144.58 to premium support. Premium support recognises $506.02 a month for 23 months, then $506.12.
| Obligation | Pattern | SSP | Allocated |
|---|---|---|---|
| Subscription | Ratable, 24 months | $72,000.00 | $60,722.89 |
| Standard support | Ratable, 24 months | $7,200.00 | $6,072.29 |
| Premium support (24x7, 1-hr SLA) | Ratable, 24 months | $14,400.00 | $12,144.58 |
| Onboarding (last line, residual $0.00) | Point in time, month 1 | $6,000.00 | $5,060.24 |
| Total | $99,600.00 | $84,000.00 |
Both support tiers get their pro-rata share of the discount, like every other line: standard support's $7,200.00 SSP becomes $6,072.29 and premium support's $14,400.00 SSP becomes $12,144.58. Nothing in the contract supports placing the discount only on the subscription or only on one tier (ASC 606-10-32-36 and 32-37). Our post on how a bundle discount is allocated covers when that would change.
| Month | Recognised | Made up of | Deferred after month |
|---|---|---|---|
| 1 (Mar 2027) | $8,349.39 | Subscription $2,530.12 + standard support $253.01 + premium support $506.02 + onboarding $5,060.24 | $75,650.61 |
| 2–23 | $3,289.15 each | Subscription $2,530.12 + standard support $253.01 + premium support $506.02 | falls to $3,289.31 |
| 24 (Feb 2029) | $3,289.31 | Subscription $2,530.13 + standard support $253.06 + premium support $506.12 | $0.00 |
How the engine handles the support lines:
- Allocation rounding: each line except the last is rounded half-up to the cent, and onboarding, the last listed obligation, takes the residual. Here its pro-rata share rounds exactly to $5,060.24, so the residual is $0.00. The amounts are quoted, not percentage weights.
- Monthly amounts: premium support recognises $506.02 for 23 months and $506.12 in month 24, so the final month absorbs $0.10 (terminal-period remainder absorption). Standard support recognises $253.01 for 23 months and $253.06 in month 24, absorbing $0.05. The subscription recognises $2,530.12 for 23 months and $2,530.13 in month 24, absorbing $0.01.
- Tie-out: total recognised is $84,000.00 and deferred revenue ends at $0.00.
The engine result's SHA-256 hash is c786a647ba347dd2bcb322e2181ef0efe6373300db207d761cc07041f3c22800. The app reproduces this exact allocation and schedule from an uploaded workbook (workbook SHA-256 6af707f22c0cec111d5adfae3f8117b6240d8bb1b02125bcb20cc96c66184316), or you can re-perform the allocation in the SSP allocation calculator.
What evidence supports a support-tier SSP?
The evidence that supports a support-tier SSP is the data behind the figure: standalone sales or renewals of the tier, a market assessment of similar support, or a cost build with a margin. It sits next to the SSP, with the contract clause that describes the tier, its response commitments and the date the estimate was last reviewed.
A support-tier file usually holds:
- The clause describing each tier, with its page and verbatim excerpt.
- The distinct assessment for each tier, including any support included at no extra charge.
- The SSP method under ASC 606-10-32-34, the data it rests on and the review date.
- If SSP is a percentage of the subscription, the deals the percentage was observed in.
- The allocation and the monthly schedule, tied to the contract price.
Terms pulled from a contract by software, including Soluqube's heuristic extraction, still need a person to confirm them before they go into the file. For another service line, our post on whether SaaS training is a separate performance obligation uses the same file structure. The sample SSP workpaper shows it as a finished document.
How can you test this on your own contracts?
Send us three of your hardest bundled contracts through the design partner programme, and you get a free 3-contract workpaper. You confirm the obligations, support tiers and stated prices. We send back the relative SSP allocation, a schedule that ties to the cent, a page and verbatim excerpt for each obligation, and a hashed export.
Apply through the design partner programme. Founding prices for the first 10 customers are a free 3-contract workpaper, a $475 audit workpaper for up to 10 contracts, a $1,750 QoE deal pack and $49/month firm tool access. Details are on pricing. The engine doesn't model contract modifications, variable consideration, usage-based support or billing schedules yet, so treat those topics as guidance only.
Is standard support included in every SaaS subscription a separate performance obligation?▼
Not always. Basic help that comes with every subscription at no extra charge is often part of the subscription service itself. A tier the customer chooses and pays for, with faster response times or extra coverage, is more likely a distinct promise. Assess each tier against ASC 606-10-25-19 and document the conclusion.
Can two support tiers have different SSPs in the same company?▼
Yes. Each tier is a different promise, so each needs its own SSP and its own evidence. A premium tier with a one-hour response commitment usually costs more to deliver and sells at a higher price than a standard tier. Keep separate standalone sales data or cost builds for each tier.
Is premium support SSP updated when list prices change?▼
Not for contracts already signed. ASC 606-10-32-43 says the transaction price is not reallocated for later changes in standalone selling prices. New contracts use the current estimate. Record the date each support-tier SSP was last reviewed, so a reviewer can see which figure applied when each contract was signed.