Ramp pricing is common in multi-year SaaS deals: the customer pays less in year 1 and more in later years for the same subscription. The invoices rise, but revenue often does not follow them. This worked example takes a three-year ramp of $60,000, $90,000 and $120,000, treats it as one series performance obligation, and shows the engine's ratable schedule alongside the contract asset and contract liability that the billing creates.
What is the contract in this example?
The customer signs a 36-month subscription starting November 2026 with a price ramp: $60,000 in year 1, $90,000 in year 2 and $120,000 in year 3, a total of $270,000. The service is the same stand-ready platform access in every year, so the example treats it as a single performance obligation made up of a series of distinct periods.
Under ASC 606-10-25-14(b) and 25-15, a series of distinct services that are substantially the same and have the same pattern of transfer is accounted for as one performance obligation. Because there is only one obligation, the relative SSP allocation in ASC 606-10-32-28 to 32-41 assigns the full $270,000 to it; there is nothing to split.
How does the engine recognise a $270,000 ramp?
The engine recognises the full $270,000 transaction price ratably over 36 months, at $7,500.00 every month from November 2026 to October 2029. The unrecognised balance falls from $262,500 after month 1 to $0 after month 36, and total revenue is $270,000.00, regardless of how the invoices are timed.
| Month | Revenue | Unrecognised transaction price |
|---|---|---|
| Nov 2026 | $7,500.00 | $262,500.00 |
| Dec 2026 | $7,500.00 | $255,000.00 |
| Jan 2027 | $7,500.00 | $247,500.00 |
| ... | $7,500.00 every month | |
| Aug 2029 | $7,500.00 | $15,000.00 |
| Sep 2029 | $7,500.00 | $7,500.00 |
| Oct 2029 | $7,500.00 | $0.00 |
| Total | $270,000.00 |
The year-1 invoice is $60,000, yet year-1 revenue is higher, because a ramp is a pricing pattern, not a change in what the customer receives.
How do billing and revenue diverge on a ramp?
When revenue runs ahead of billing, the entity holds a contract asset; when billing runs ahead, it holds a contract liability (ASC 606-10-45-1 to 45-4). On this ramp, each annual invoice creates a liability that unwinds into an asset by year end, until billing and revenue both reach $270,000 in October 2029.
The table below is computed outside the engine; it assumes annual billing in advance at each contract-year start. The engine does not model billing or contract assets.
| Point | Cumulative revenue | Cumulative billing | Net position |
|---|---|---|---|
| Nov 2026, after bill 1 | 7,500 | 60,000 | 52,500 contract liability |
| Oct 2027, year-1 end | 90,000 | 60,000 | 30,000 contract asset |
| Nov 2027, after bill 2 | 97,500 | 150,000 | 52,500 contract liability |
| Oct 2028, year-2 end | 180,000 | 150,000 | 30,000 contract asset |
| Nov 2028, after bill 3 | 187,500 | 270,000 | 82,500 contract liability |
| Oct 2029 | 270,000 | 270,000 | 0 |
When does a ramp not mean straight-line revenue?
A ramp only supports one ratable schedule if the customer receives the same service every year. If later years add seats, a higher tier or extra modules, the price increase may reflect different standalone selling prices for different goods or services, and the answer changes. That is a judgement for the entity and its auditor.
In that case, the analysis returns to identifying the performance obligations and estimating standalone selling price for each (ASC 606-10-32-31 to 32-35), and the allocation may no longer put the full $270,000 on one line. Document what the customer receives each year either way.
What does this example not cover?
The engine applies one term to every obligation, recognises point-in-time obligations in month 1 with no delivery-date input, and spreads ratable months equally with no daily proration. It has no billing or contract-asset modelling, which is why the table above sits outside it, no variable consideration and no contract modifications.
How can you check your own ramp deals?
Model the allocation for multi-obligation deals in the SSP allocation calculator, read how the residual cent is handled when allocations do not divide evenly, or brush up on the relative SSP method and standalone selling price. Send three ramp contracts for a free 3-contract workpaper.
Does revenue on a ramp deal follow the invoices?▼
Not when the subscription is one series obligation delivering the same service each period. Revenue follows the transfer of the service over time, so it is recognised ratably, and the gap between invoices and revenue appears as a contract asset or contract liability.
Is a price ramp variable consideration?▼
In this example the ramp amounts are fixed in the contract, so the $270,000 is fixed consideration. Usage-based or other variable amounts, and the ASC 606-10-32-39 to 32-41 guidance on allocating them, are outside this example.
Why does the year-1 contract asset reach $30,000?▼
By October 2027 the entity has recognised $90,000 of revenue but billed only $60,000 under the assumed annual billing in advance. The $30,000 difference is revenue earned ahead of billing, presented as a contract asset until the year-2 invoice.