How do I allocate transaction price across multiple performance obligations?

The allocation rule itself

RevenueHub's own explainer on standalone selling prices states the core rule directly: allocate the transaction price to each performance obligation in proportion to its standalone selling price. If a contract bundles a $6,000 product with support that would sell for $1,000 on its own and the product for $5,500 on its own, the $6,000 gets split proportionally to those two SSPs, not evenly and not by whatever the contract's own line-item pricing happens to say.

When the standalone price isn't observable

Not everything in a bundle is ever sold alone. RevenueHub's guidance lays out three permitted estimation approaches when SSP isn't directly observable: an adjusted market assessment (what would the market pay for this, standalone), expected cost plus margin (the entity's own fulfillment cost, marked up appropriately), and a residual approach, which takes the total transaction price and subtracts the SSPs that are observable, leaving the remainder for whatever isn't. The residual approach specifically is only appropriate when a price is highly variable or uncertain — it isn't a default shortcut for anything inconvenient to price directly.

Why the contract's own stated price for each item isn't the answer

A common mistake is assuming the price listed against each line item in the contract is automatically its allocated transaction price. It isn't — a vendor might discount a bundle's total price while listing full, undiscounted prices against each component for contractual clarity. ASC 606's allocation is based on relative SSP, not on however the contract happens to itemize things, which is exactly why a discount applied to the whole bundle generally has to be allocated proportionally across every obligation, not dumped entirely onto whichever one the contract lists last.