Standalone Selling Price (SSP)
The standalone selling price is the price at which a company would sell a promised good or service separately to a customer. It is the basis for allocating the transaction price to performance obligations under ASC 606 and IFRS 15.
Revenue Recognition
Explanation
The best evidence of SSP is an observable price from separate sales in similar circumstances to similar customers. If no observable price exists, the SSP must be estimated. Suitable methods include:
• Adjusted market assessment approach – based on what the market would pay,
• Expected cost plus a margin approach – based on forecast costs and an appropriate margin,
• Residual approach – permitted only in limited circumstances, when selling prices are highly variable or uncertain.
Many companies, particularly under US GAAP, use SSP ranges instead of single values. A list price is not automatically the SSP.
Why It Matters
SSPs determine how much revenue each performance obligation receives – and therefore when revenue is recognized. In SAP Revenue Accounting and Reporting (RAR), SSPs are typically determined automatically through condition records or rule-based logic. Data quality, clear ownership, and regular review are essential.
Related Terms
Allocation · Performance Obligation · Transaction Price · Lease and Non-Lease Components
Related Articles
• Standalone Selling Price (SSP): Methods and Common Mistakes
• The 5-Step Model of IFRS 15 / ASC 606 Explained for SAP Teams
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