A sale that earns points sells two things. The member gets the goods today and a reward later. Standalone selling price, or SSP, is the number that splits the cash between them. Set it too low and revenue is booked before it is earned. Set it too high and too much revenue waits in the points liability.
What is standalone selling price under ASC 606 and IFRS 15?
Both standards use the same words. Standalone selling price is “the price at which an entity would sell a promised good or service separately to a customer” (ASC 606-10-32-32; IFRS 15, paragraph 77).
The best evidence is a real price. That is what the business charges when it sells the item on its own to similar customers (ASC 606-10-32-32). A list price is not presumed to qualify (ASC 606-10-32-32).
The price matters in step four of the revenue model. The business sets each standalone selling price when the contract starts. It then splits the transaction price “in proportion to those standalone selling prices” (ASC 606-10-32-31).
How do you estimate standalone selling price without an observed price?
When no real price exists, the business estimates one. It has to use all the information it can reasonably get and “maximize the use of observable inputs” (ASC 606-10-32-33). It must also use the same methods in similar circumstances. Both standards name three suitable methods and say the list is not closed (ASC 606-10-32-34; IFRS 15, paragraph 79). A mix of methods is allowed when two or more items have prices that are highly variable or uncertain (ASC 606-10-32-35).
| Method | What the standard describes | When it is allowed | Applied to a loyalty point |
|---|---|---|---|
| Adjusted market assessment | Judge what a buyer in the market would pay. Rival prices are one guide. | Any time the price is not directly observable. | Start from what the reward sells for in cash, such as the fare of the seat an award ticket replaces. |
| Expected cost plus a margin | Forecast what it costs to deliver, then add a fair margin. | Any time the price is not directly observable. | Start from the cost to supply the reward and add a margin. |
| Residual | Take the total price and subtract the known prices of the other items. | Only when the price is highly variable or has not been set yet. | A full-price sale leaves nothing over for the points. |
In a full-price sale, the goods have an observed price equal to the whole receipt. Subtract it and the points get zero. Deloitte quotes the basis for conclusions on this case. When the residual method gives “no, or very little, consideration,” the entity should consider whether the estimate is appropriate (Deloitte DART 7.3).
How does standalone selling price apply to loyalty points?
Points earned on a purchase are an option to buy something later at a discount. Such an option is a separate promise only when it gives the customer “a material right” it would not get without the contract (IFRS 15, paragraph B40). When it does, “the customer in effect pays the entity in advance for future goods or services” (IFRS 15, paragraph B40).
When points have no observed price, the standards set a rule for options. The estimate “shall reflect the discount that the customer would obtain when exercising the option” (IFRS 15, paragraph B42). Two adjustments follow. The first takes off any discount the customer could get without the option. The second applies “the likelihood that the option will be exercised” (IFRS 15, paragraph B42; ASC 606-10-55-44).
The standards include a loyalty example. In it, a business gives 1 point for every $10 spent. Each point takes $1 off a later purchase. Customers spend $100,000 and earn 10,000 points. The business expects 9,500 to be redeemed. So it prices each point at $0.95 and allocates $8,676 of the $100,000 to the points (Example 52, FASB and IFRS staff paper).
How do you calculate the standalone selling price of a loyalty point?
For illustration, a retailer gives 5 points per $1 and redeems 100 points for $1 off. A member spends $500 and earns 2,500 points, worth $25 at face value.
- Discount without the points. Shoppers who skip the program get no discount, so nothing comes off.
- Chance of redemption. The retailer expects members to redeem 80% of points. The points are worth $25 × 80% = $20.
- Price of the goods. The shelf price is $500, and it is observed. Together the two prices add up to $520.
- Split. The goods get $500 × 500 / 520 = $480.77, booked as revenue now. The points get $500 × 20 / 520 = $19.23, held as a contract liability.
One assumption moves the answer. At 90% expected redemption, the points are worth $22.50 and take $21.53 of the sale. Across $100 million of these sales, the deferral rises from $3.85 million to $4.31 million. A 10-point change in the redemption estimate shifts about $460,000 of revenue out of the current period.
What happens when the redemption estimate changes?
The amount set aside at the sale stays put. Both standards say so. An entity “shall not reallocate the transaction price to reflect changes in standalone selling prices after contract inception” (ASC 606-10-32-43; IFRS 15, paragraph 88).
What moves is the pace of release. In Example 52, the business later expects 9,700 points to be redeemed, up from 9,500. The $8,676 allocation does not change. Revenue follows points redeemed over points expected, so a higher expectation slows the release (Example 52). That is how breakage reaches revenue. The full mechanics are in our guide to points liability accounting.
How do Starbucks, Delta and Marriott describe standalone selling price in their 10-Ks?
Starbucks defers “the estimated selling price of Stars” as each Star is earned. The deferral is “based on the estimated value of the product for which the reward is expected to be redeemed, net of estimated unredeemed Stars” (Starbucks fiscal 2025 10-K). That is the option rule in plain words.
Delta treats a ticket that earns miles as two performance obligations, the miles and the flight. It values each on a standalone basis. For miles, it uses equivalent ticket value. That is “the quantitative value a passenger receives by redeeming miles for a ticket rather than paying cash” (Delta 2025 10-K). Delta then cuts that value for miles not likely to be redeemed, using models of past redemptions (Delta 2025 10-K).
Co-brand cards stretch the same rule. Delta splits what American Express pays it by the relative selling prices of what it delivers. That list runs from award travel and lounge access to use of the Delta brand. Delta sets those prices with a discounted cash flow analysis. Remuneration from American Express totaled $8.2 billion in 2025. Delta ended the year with $9.26 billion of loyalty deferred revenue (Delta 2025 10-K).
Marriott uses the same test for its co-brand card fees. The fees cover licensed brand IP and points, plus free night certificates and gift cards. Marriott splits them “based on their estimated standalone selling prices” (Marriott 2025 10-K). It says the estimate takes significant judgment. One input is how many points cardholders will end up redeeming (Marriott 2025 10-K).
How GRAVTY handles standalone selling price
The standalone selling price of a point is a finance estimate. Its inputs come from program data, starting with what members redeem and how often. GRAVTY tracks the cost and value of every point issued and redeemed. That gives finance and loyalty teams the liability, breakage and partner billing insight they need to govern the program (airline loyalty).
GRAVTY records every earn, burn and expiry event at the member and transaction level (points liability). That lets breakage models work from real redemption curves for each segment. For airline programs, Loyalty Juggernaut lists scenario planning and what-if analysis. The same list has an IFRS-compliant balance sheet and P&L.
Frequently asked questions
Is standalone selling price the same as list price?
Not by default. ASC 606 says a list or contract price “shall not be presumed to be” the standalone selling price (ASC 606-10-32-32). The best evidence is the price the business charges when it sells the item on its own. That price has to come from similar customers in similar circumstances.
What is the difference between standalone selling price and transaction price?
Transaction price is what the customer pays for the whole contract, and standalone selling price is what each part would sell for alone. Step four splits the transaction price “in proportion to those standalone selling prices” (ASC 606-10-32-31). In a loyalty sale, the receipt total is the transaction price. The goods and the points each carry their own standalone selling price.
Does breakage lower the standalone selling price of a point?
Yes. The estimate must reflect “the likelihood that the option will be exercised” (IFRS 15, paragraph B42). In the standards’ loyalty example, a point worth $1 off is priced at $0.95. The business expects 9,500 of 10,000 points to be redeemed, so 5% expected breakage takes 5% off the price (Example 52).
Can standalone selling price be a range instead of one number?
Yes, in Deloitte’s view, if the range is narrow and concentrated. Deloitte says a range would most likely meet the allocation goal if it covers more than 50 percent of relevant transactions. It should also reach no more than 20 percent from the midpoint in either direction (Deloitte DART 7.3).
Does every discount or promotion create a material right?
No. An option counts only when it gives the customer something they would not get without the purchase. IFRS 15 gives the example of “a discount that is incremental to the range of discounts typically given” to that class of customer (IFRS 15, paragraph B40). An offer priced at its standalone selling price is a marketing offer, counted only when the customer buys (IFRS 15, paragraph B41).