Revenue – ifrs 15 handbook

Evaluating optional purchases at a discount compared with the 
original contract
In many cases, an option to purchase additional goods or services at a discount 
from the price in the original contract will give rise to a material right. However, 
in some scenarios it may be challenging to determine whether the discounted 
price gives rise to a material right – e.g. when an entity uses the cost plus a 
margin pricing model and the decrease in price relates to a decrease in costs 
passed to the customer. In these cases, it appears that an entity should 
consider the following indicators to determine whether the discounted price for 
the optional purchases reflects the stand-alone selling price for those goods or 
services – i.e. whether there is a material right. 

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270 | Revenue – IFRS 15 handbook
Indicators – No material right
Indicators – Material right
Decrease in price reflects the 
expected decrease in costs
Decrease in price is incremental to 
the expected decrease in costs
Decrease in price is consistent with 
price decreases for other similar 
mature goods or services
Decrease in price is incremental to 
price decreases for other similar 
mature goods or services
Discounted price is consistent 
with reduced price offered to 
other customers, including new 
customers – i.e. all current and 
potential customers benefit from the 
decrease in costs
Discounted price is lower than the 
price offered to other customers – 
i.e. not all customers benefit from 
the decrease in costs
The right to the discounted price 
does not accumulate in a manner 
that incentivises the customer to 
make future purchases
The right to the discounted price 
accumulates in a manner that 
incentivises the customer to make 
future purchases