Understanding SSP rules
Standalone selling price rules
The standalone selling price is defined as the price at which a vendor would sell a promised product (goods or services) separately to a customer.
ASC 606 allows for several different approaches to establishing standalone price for products sold. REVLOCK enables users to easily define rules that can be used to establish standalone price automatically in full compliance with ASC 606.
Standalone Price Policy
REVLOCK help easy configuration of Standalone Price rule using Standalone Price Policy. What follows explain different Standalone Price policies that REVLOCK supports.
When using this policy actual sales price will be set as standalone price for the product being sold. For example, when sold individually, 1-year SAAS subscription for Product A is $5000.
When using this policy user will define a numeric standalone price for the product being sold. For example, when sold individually, 1-year SAAS subscription for Product A is $4000.
Dollar Amount Range
This policy is used when sales personals have some flexibity in price when selling products to customer. For example, when sold individually, price for 1-year SAAS subscription for a Product A is between $3200 and $3800.
When using this policy user will define a percentage discount that is given to the customer with respect to the list price. For example, when sold individually, 1-year SAAS subscription for Product A is sold at 10% discount from list price. So, if the list price for Product A at the time of sale is $4000 than standalone price will be $3600.
Simple Percent Net
Simple Percent Net policy allows REVREC users to configure Standalone Price rule for sales where pricing of one product is dependent on pricing of the other. For e.g. perpetual license for Product A is sold for $10,000. Pricing for annual support is 20% of the license i.e. $2000.
Apportioned Percent Net
Apportioned Percent Net policy allows REVREC users to configure Standalone Price rule for sales where pricing of one product (target) is dependent on pricing of the other (source). Additionally it takes in to account the term of the source and target product to calculate the apportioned standalone price. For e.g.
24 month Term license for Product A is sold for $20,000.
Advanced Support is sold for first 3 months. SSP for advanced support is 25% of the license.
First year standard support is given away for free
Second year standard support is sold for $2000
To use the Percent Net or Apportioned Percent Net Policy, you must provide Related Product Field for all the products that will be involved in your percent NET rule. The Related Product field can be a Product Code, Product Type, Product Family or any other Custom attribute, which is used to establish a relationship between products which are sold together in a given sales order.
This policy enables REVREC user to use traditional Residual method. This policy will generall be used in cases where pricing of license is highly variable. Here is example that would help understand standalone price calculation when Residual policy is used.
This policy can be used when the user wants to exclude a certain product for Revenue re-allocation. Rev Rec allows you to use a "Standalone" pricing policy where the logic is to set the actual sales price as Standalone selling price. This policy is designed to treat the product as a pass-through where it does not get re-allocated with other products in the Sales order.
In the above example, the Setup fee is sold for $800 and it does not re-allocated with other products in a contract.
Updated on: 08/12/2022