Scope
What are the standalone selling price rules?
How is the discount calculated in RevRec?
What are the types of SSP rules?
What are the types of dollar amount range available in RevRec?
How is the discount percentage calculated in RevRec?
What is simple percent net in RevRec?
What is apportioned percent net in RevRec?
How is the residual policy applied in RevRec?
Summary
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 a standalone price for products sold. RevRec enables users to easily define rules that can be used to establish standalone prices automatically in full compliance with ASC 606. RevRec helps easy configuration of Standalone Price rules using the Standalone Price Policy. The following content explains different Standalone Price policies that RevRec supports.
- Dollar Amount Range
- Discount Percentage
- Simple Percent Net
- Apportioned Percent Net
- Residual
Solution
Standalone Price Policy
RevRec helps easy configuration of Standalone Price rules using the Standalone Price Policy. The following content explains different Standalone Price policies that RevRec supports.
Dollar Amount
When using this policy user will define a numeric standalone price for the product being sold. For example, when sold individually, a 1-year SAAS subscription for Product A is $4000.
Dollar Amount Range
This policy is used when sales personals have some flexibility in price when selling products to customers. For example, when sold individually, the price for a 1-year SAAS subscription for Product A is between $3200 and $3800.
You can set the SSP Value method as follows:
- Mid-Point: The midpoint of the range is applied.
- Boundary: The low or high end of the range, whichever is closer to the sale price is applied.
- Lowest: The low end of the range is applied.
- Highest: The high end of the range is applied.
Discount Percentage
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, a 1-year SAAS subscription for product A is sold at a 10% discount from the list price. So, if the list price for product A at the time of sale is $4000 then the standalone price will be $3600.
Simple Percent Net
Simple Percent Net policy allows RevRec users to configure the standalone price rule for sales where the pricing of one product is dependent on the 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 the standalone price rule for sales where the pricing of one product (target) is dependent on the pricing of the other (source). Additionally, it takes into account the term of the source and target product to calculate the apportioned standalone price. For e.g.
A 24-month term license for product A is sold for $20,000.
Advanced Support is sold for the 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 a Product Type attribute for all the products that will be involved in your percent NET rule. The Product Type attribute is used to establish a relationship between products which are sold together in a given sales order.
Residual
This policy enables RevRec users to use the traditional residual method. This policy will generally be used in cases where the pricing of licenses is highly variable. Here is an example that would help understand standalone price calculation when Residual policy is used.
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