Relative SSP method
The relative standalone selling price method allocates a contract's transaction price to each performance obligation in proportion to its standalone selling price. Each obligation receives its SSP divided by the sum of all SSPs, multiplied by the transaction price, so a bundle discount is spread proportionately across every obligation.
Standard references
- ASC 606606-10-32-29 and 32-31
- IFRS 15paragraphs 74 and 76
- Ind AS 115paragraphs 74 and 76
Worked example
Illustrative: transaction price $120,000; subscription SSP $100,000; professional services SSP $25,000.
- Sum of SSPs: $100,000 + $25,000 = $125,000. The bundle discount is $5,000 (4%).
- Subscription: $100,000 / $125,000 × $120,000 = $96,000.
- Services: $25,000 / $125,000 × $120,000 = $24,000.
- Check: $96,000 + $24,000 = $120,000. The $5,000 discount is spread $4,000 / $1,000.
Result: Allocated amounts $96,000 and $24,000, which then drive each obligation's recognition schedule.
Illustrative figures for explanation only, not taken from a real contract.
Common mistakes
- Allocating the whole discount to one obligation without meeting the conditions for allocating a discount entirely to some obligations (ASC 606-10-32-37; IFRS 15.82).
- Rounding each line to the cent independently so the allocations no longer sum to the transaction price, with no written rule for the residual cent.
- Using stale or undocumented SSPs, which is where most auditor challenges on allocation start.
How Soluqube handles this
Soluqube computes this allocation in integer arithmetic at 10^6 scale, rounded to cents, with a documented rule for the residual cent, and hashes the export so it can be re-run.