When a single transaction contains more than one promise, accounting standards allocate the total price among them in proportion to each promise's standalone selling price, the amount it would command if sold alone. Where a direct observable price does not exist, the business estimates it using a defensible, consistent method. This allocation decides how much revenue attaches to each obligation.
In a loyalty program, a purchase bundles the immediate good with the points the member earns. The points rarely have an observable standalone price, so the operator estimates their value from what a member actually receives when they redeem, adjusted for the likelihood that the points are redeemed at all. The basis is the value the customer obtains, not what the reward costs the business to provide. That distinction is the substance of the standard: allocating on cost is the incremental-cost method the current rules replaced. That estimated value sets the slice of each sale allocated to the loyalty obligation and deferred.
For an enterprise operator, standalone selling price is the hinge between program design and reported revenue. A higher estimated point value defers more revenue per sale and enlarges the liability; a lower one does the opposite. Because the estimate drives material numbers and draws audit attention, it has to rest on real redemption and breakage data rather than convenient assumptions.
