What is the standalone selling price formula?

The standalone selling price formula is the arithmetic at the centre of Step 4 of ASC 606. Once you have a transaction price and an SSP for each performance obligation, the formula allocates the price in proportion to those SSPs. The formula is one line. The hard parts are getting the ratios right, rounding each result so the total ties to the contract price, and laying the calculation out so a reviewer can re-perform it. This post covers all three with a three-line, 12-month SaaS bundle run through the Soluqube engine, which uses integer arithmetic so the allocation ties to the cent. For how SSPs are estimated in the first place, see how SSP allocation works in our ASC 606 SSP allocation guide. Key terms: standalone selling price, transaction price and relative SSP method.

What is the relative SSP formula?

The relative SSP formula allocates the transaction price to each performance obligation in proportion to its standalone selling price. Each obligation receives the contract price multiplied by its own SSP and divided by the sum of all SSPs. ASC 606-10-32-31 sets this as the method, and it applies whether the bundle sells at a discount or a premium.

Allocated amount = Transaction price × Obligation SSP ÷ Total SSP

The formula needs two inputs you have already settled: the transaction price from Step 3 and an SSP for each performance obligation. If the price is below total SSP, the formula spreads the discount pro rata. If it is above, it spreads the premium the same way.

How do you compute the weights?

Each weight is one obligation's SSP divided by total SSP. The weights always add up to exactly one, so the allocations add up to the full contract price. Keep each weight as an exact ratio rather than a rounded percentage, because a weight rounded too early moves the allocated amount, sometimes by more than a few cents.

Most SSP sets do not divide cleanly. In the example below, total SSP is $55,000.00, and a ratio such as $45,000 ÷ $55,000 is a repeating decimal that never terminates. A spreadsheet that shows the weight to two decimals and then multiplies by that displayed figure gives a different answer from one that keeps the full ratio. The safe order is to multiply first, divide second and round last.

What does the formula give on a $50,000 SaaS bundle?

Take a $50,000.00, 12-month contract starting November 2026, with a subscription, onboarding and training. Their SSPs total $55,000.00, so the $5,000.00 discount is spread pro rata. The formula allocates $40,909.09, $6,363.64 and $2,727.27, which ties to $50,000.00, and deferred revenue reaches $0.00 in month 12.

The subscription line is $50,000 × $45,000 ÷ $55,000, rounded to $40,909.09. Onboarding rounds up to $6,363.64. Training takes what is left: $50,000.00 − $40,909.09 − $6,363.64 = $2,727.27.

The subscription recognises $3,409.09 for 11 months and $3,409.10 in month 12, so the final month absorbs $0.01 (terminal-period remainder absorption). Total recognised is $50,000.00. The engine result's SHA-256 hash is 7bb1cfef98f0a6f167119def1bef783ffa27d1d5fbe17bf729f5be263b6688d8. This schedule is engine behaviour: the app's upload workbook gives the same allocation but puts every point-in-time item in month 1. You can re-perform the allocation in the SSP allocation calculator.

How should each allocation be rounded so the total ties?

Round every line except one to the cent, then give the last line whatever remains of the transaction price. That way the allocations always add up to the contract price exactly. The rule should be written down, applied the same way every time, and name which line takes the residual, so a reviewer gets the same answer.

Rounding each line on its own and adding them up can leave the total a cent above or below the contract price. In the example, the rounded shares happen to add up to $50,000.00, so the residual on the training line is zero. On another contract it will be a cent. Our post on where the residual cent goes in SSP allocation walks through cases where it is not zero. The same idea applies in Step 5: round the monthly amounts down and let the final month absorb the remainder, so deferred revenue ends at $0.00.

How do you lay it out in a spreadsheet?

Use one row per obligation and one column per step: SSP, SSP source, the weight as a full ratio, the raw allocation, the rounded allocation, and a residual check. Put the transaction price and total SSP in labelled cells, reference them by name, and add a control cell showing allocations minus price, which should be zero.

A layout a reviewer can follow usually has:

1. The contract price, with its clause page and excerpt.
2. Each obligation, its SSP and the observable price or estimate behind it.
3. The formula in each row, referencing the price and total SSP cells, not typed numbers.
4. The rounding rule in words, next to the line that takes the residual.
5. A monthly schedule that ends at $0.00 deferred.

The sample SSP workpaper shows the same structure 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 and stated prices. We send back the relative SSP allocation, a schedule that ties to the cent, clause evidence for each obligation, and a hashed export.

Founding prices for the first 10 customers are available on pricing. The engine doesn't model contract modifications, variable consideration or billing schedules yet, so treat those topics as guidance only.