How Automated SSP Works

Standalone Selling Price (SSP) is required under ASC 606 to allocate a contract's total transaction price across each distinct performance obligation. Tabs automates this end-to-end.

Overview

The SSP workflow has three stages that flow from memo to revenue:

1. Define — Create an SSP memo with effective date, methods and values for each product.

2. Activate — Approve the memo to govern SSP allocation per memo configuration.

3. Apply — Contracts signed on or after the effective date automatically allocate the total transaction price to each performance obligation using the relative SSP method.

Step by Step Guide

Prerequisites: In order to use automated SSP, you must have:

1. Product catalog configured

2. Contract signed for signature date extraction

3. Contract processed with performance obligations defined

Step 1. Define SSP Memo

• Go to SSP Memo from the side navigation.

• Download template .xlsx file

• Fill out the template per your existing SSP configuration

  • Memo details tab

    • Label: name your memo (ex: 2026 SSP).

    • Accounting memo: any relevant information about this SSP configuration.

    • Effective date: defines whether a contract will follow this memo based on inception date (signature date when available, or the earliest performance obligation start date if not). For example, SSP memo will only apply to contracts signed on or after its effective date of 1/1/2026. So this SSP memo won’t apply to a contract signed on 12/25/2025.

• Products tab

  • Product: auto populated from the product catalog. Do NOT change.

  • SSP Method: defines an estimation method and value for every product in the catalog. Supported methods:

    • Observable — Use sales price from the contract as SSP. Recommended for brand new products without prior history to define SSP.

    • FMV Fixed — A constant dollar value set constant regardless of the sales price.

    • FMV % of Deal — SSP as a percentage of the total transaction price, used when the item's value scales with deal size. Optional minimum value to set the floor or/ and maximum to cap the ceiling.

    • Min/Max Clamp — The minimum and maximum range of SSP. If the product sales price falls outside the range, SSP is clamped to the nearest bound.

    • Residual — SSP equals the remaining transaction price after all other product SSPs are carved out. A fallback value is used when the residual pool is exhausted. Used only when direct evidence is unavailable and other methods are not appropriate.

  • Notes: optional to describe the rationale used for each SSP method and value.

• Upload template and click next.

• Once processed, review the SSP memo. Repeat prior steps if there’s an error.

• Upload support files: Optionally, upload relevant supporting documentation (analysis workbooks, pricing studies) for audit readiness.

• Approve the SSP memo to activate.

That’s it! Tabs will now automatically apply the SSP memo to eligible contracts and allocate total transaction price to each performance obligation in the following steps.

Step 2. Automatic Contract Application

When a contract is signed, Tabs automatically determines if it’s subject to SSP allocation based on the contract's inception date.

Step 3. Automatic SSP Determination & Allocation

Each contract's Revenue tab shows the SSP determination and allocation waterfall so you can see exactly how revenue was allocated.

For each contract, the SSP engine runs a two-phase process:

Phase 1: Determine SSP for each obligation

Each product's SSP is calculated using the method defined in the SSP memo. Non-residual methods (FMV Fixed, $ of Deal, Min/Max Clamp, Observable) are computed first. Their total is then subtracted from the transaction price to determine the residual pool, if any.

Phase 2: Allocate transaction price

The total transaction price is allocated to each performance obligation using the relative SSP method:

Allocated transaction price = (SSP / Total SSP) × Total Transaction Price

Each performance obligation's allocation percentage reflects its relative SSP value. The allocated amount becomes the revenue basis recognized for that performance obligation either at a point in time or over its service period.

Example

Notice the contract's total transaction price ($16,400) differs from total SSP ($18,100). The discount is spread proportionally — each obligation's allocated revenue is lower than its SSP by the same ratio.

Step 4. Automatic Revenue recognition

After allocation, each obligation's allocated amount is recognized based on its recognition pattern at a point-in-time or over time.

Audit trail — Every SSP memo, its approval history, applied contracts, and allocation calculations are retained for full audibility under ASC 606 disclosure requirements.

What happens when SSP is updated?

Coming soon! SSP Versioning

• A new SSP memo version is created with updated methods and values.

• Once approved, it receives a new effective date and supersedes the prior version going forward.

• Existing contracts are not re-allocated. SSP is locked at contract inception per ASC 606-10-32-14.

• Only contracts signed on or after the new effective date use the updated SSP values.