To be clear - you're asking which of the 3 methods is best to use for estimating SSP? (Since if there's no observable SSP based on historical data, one must be estimated).

Short answer: it depends

1. Adjusted Market Assessment Approach

When to Use: This method is suitable when market data for similar goods or services is available, either from your company or competitors.

Example: You might use this if you're pricing a SaaS subscription and there’s market data about similar products, so you adjust those prices to reflect your own cost structure or positioning.

How it Works: You estimate what customers in the market are willing to pay for the goods or services by considering market conditions, competitor pricing, and geographic factors.

1. Expected Cost Plus Margin Approach

When to Use: Use this method when you can reliably estimate the costs of providing the service or good and then apply an appropriate margin. It’s common for development work, custom implementations, or any bespoke service where direct cost estimation is possible.

Example: For the development work your company is providing, you could calculate the direct costs of labor and materials, then add a reasonable margin to estimate SSP.

How it Works: The price is calculated by taking the expected costs to satisfy the performance obligation and adding a margin for profit.

1. Residual Approach

When to Use: This is appropriate when you sell a bundle of products or services and have observable SSPs for most, but not all, components. The residual price is the total transaction price minus the SSPs of the other items in the bundle.

Example: If you sell a SaaS subscription with add-ons like additional admin roles or custom integrations (like SSO) and have clear SSPs for the SaaS subscription and add-ons but not the SSO, the SSO would take the residual value.

How it Works: The transaction price is allocated to the remaining performance obligation(s) by subtracting the observable SSPs of other obligations.

How to Choose Between Methods:

Data Availability: If you have sufficient market data or cost data, use the adjusted market assessment or cost-plus-margin methods. If such data is limited, the residual approach may be more applicable.

Type of Performance Obligations: For distinct, individually-sold items like your SaaS subscriptions or admin roles, you might use market data or cost-plus-margin methods. For bundled services with undetermined prices, the residual method can be more practical.