Unbundling licences and support without a spreadsheet war
A calmer way to allocate transaction price when Hong Kong distributors sell software licences with multi-year support.
Bundled software deals are a recurring guest in our contract portfolio reviews. The commercial team sells “one price.” The accounts need distinct performance obligations when the licence and the support are capable of being distinct under IFRS 15.
Start from the contract language
Before building allocation models, we read whether support is stand-alone sellable, whether updates are critical to the licence’s utility, and whether renewal pricing exists as an observable signal. Many Hong Kong distribution agreements already imply a renewal rate for support even when the initial invoice is silent.
Keep the model explainable
Verification is not a contest to produce the most elaborate spreadsheet. Controllers need an allocation they can defend in a one-page memo: observable prices used, residual approach if required, and how variable consideration (rebates, marketing funds) entered the calculation.
When the model cannot be explained without a private glossary, it usually needs simplification — not more tabs.
Curious whether your top ten deals need unbundling? That is core work in our contract portfolio review.