Determining standalone selling price

Step 4 of the five-step revenue recognition model in ASC 606 generally requires entities to allocate the transaction price to each performance obligation under contracts with customers on a relative standalone selling price basis. The FASB Codification’s Master Glossary defines “standalone selling price” as the price at which an entity would sell a promised good or service separately to a customer.

The best evidence of a standalone selling price is the observable price of a good or service when the entity sells that good or service separately in similar circumstances and to similar customers. But, if the standalone selling price is not observable, the guidance in ASC 606-10-32-33 requires an entity to estimate it using all information that is reasonably available to the entity, while maximizing the use of observable inputs and applying estimation methods consistently in similar circumstances. Accordingly, establishing standalone selling prices can be a complicated, multistep process that often involves significant judgment.

Snapshot 2026-14 breaks down the processes involved in determining standalone selling prices under Step 4 of the revenue recognition model and features user-friendly flowcharts and examples. In addition, a Quick Start Card highlights salient features of the multistage process, noting when judgment is required.

Download Snapshot 2026-14 (PDF - 492.21KB) here and the Quick Start Card (PDF - 1.32MB) here.