Revenue – ifrs 15 handbook

Using a range to estimate stand-alone selling prices
When estimating stand-alone selling prices, it may be acceptable to select 
from a range of prices, particularly when stand-alone selling prices would be 
expected to vary for similar types of customers. A range has to be narrow 
and based on an analysis that maximises observable inputs and supports an 
assertion that any price within that range would be a valid pricing point if the 
performance obligation were sold on a stand-alone basis. 
It would not be appropriate to establish a range by determining an estimated 
stand-alone selling price and then arbitrarily adding a range of a certain 
percentage on either side of the point estimate to create a reasonable range of 
estimated selling prices.
4.1.2 
Using the residual approach to estimate stand-alone 
selling prices
IFRS 15.79(c)
The residual approach is appropriate only if the stand-alone selling price of one or more 
goods or services is highly variable or uncertain and observable stand-alone selling 
prices can be established for the other goods or services promised in the contract.
Selling price is…
If…
Highly variable
The entity sells the same good or service to different 
customers at or near the same time for a broad range 
of prices
Uncertain
The entity has not yet established the price for a good or 
service and the good or service has not previously been 
sold on a stand-alone basis
Under the residual approach, an entity estimates the stand-alone selling price of a 
good or service on the basis of the difference between the total transaction price and 
the observable stand-alone selling prices of other goods or services in the contract.
It appears that the total transaction price used in applying the residual approach 
should include the estimated amount of any variable consideration before 
applying the constraint (see 
Section 3.1
). This approach is consistent with the 
allocation objective because the estimated variable consideration is the amount of 
consideration to which the entity expects to be entitled.

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96 | Revenue – IFRS 15 handbook
IFRS 15.80
If two or more goods or services in a contract have highly variable or uncertain 
stand-alone selling prices, then an entity may need to use a combination of 
methods to estimate the stand-alone selling prices of the performance obligations 
in the contract. For example, an entity may use: 
– the residual approach to estimate the aggregate stand-alone selling prices for all 
of the promised goods or services with highly variable or uncertain stand-alone 
selling prices; and then
– another technique to estimate the stand-alone selling prices of the individual 
goods or services relative to the estimated aggregate stand-alone selling price 
that was determined by the residual approach.