Purchase Price Variance Calculator

Quantify the gap between the price you planned and the price you paid.

Purchase price variance is where procurement performance becomes a number the finance team can see. It isolates one question from all the noise in a spend report: for the volume we actually bought, did we pay what we said we would? Consistently unfavourable PPV on a contracted item means the contract is not being honoured — by the supplier, or by your own buyers.

Your numbers

Standard / planned price

per unit

The contracted or budgeted unit price.

Actual price paid

per unit

Quantity purchased

units

Total price variance

—

Positive is unfavourable: this much above plan on this purchase.

Variance per unit —

Variance vs standard —

Updates as you type · nothing leaves your browser

The formula

PPV = (Actual price − Standard price) × Quantity

A positive result is unfavourable — you paid above plan.

What it means

Purchase Order — full definition

Read in the glossary

How to use it

1
Set the standard price from the contract or the budget rate, not from last month's invoice.
2
Use the actual price net of discounts and rebates, so the variance reflects real cash.
3
Multiply by the quantity actually bought — a small per-unit gap on a large volume is where the money is.

Where it goes wrong

PPV rewards buying cheap, which is not the same as buying well. A favourable variance won by dropping to a lower-quality supplier reappears later as scrap, rework or returns.
Splitting variance from a stale standard turns the metric into noise. Refresh standards at least annually, and after any material market move.

Worked example

A small gap on a large order

Standard 20, actual 21.50, quantity 500. Per-unit variance is 1.50 — only 7.5% — but total variance is 750 unfavourable on a single order. Repeat that monthly and it is 9,000 a year leaking against a contract everyone believes is being enforced.

Common questions

Is a favourable PPV always good?

No. It can come from a genuine negotiation, from buying a cheaper substitute, or from over-ordering to hit a price break you did not need. Read it alongside quality and inventory metrics.

When should PPV be recognised?

At receipt, against the purchase order — that is when the price is committed. Recognising it at invoice mixes price variance with invoicing errors.

How does PPV relate to maverick spend?

Closely. Off-contract buying is one of the largest sources of unfavourable PPV, because it bypasses the negotiated price entirely.

Let AWRA do this on your live data

This calculator works on one set of numbers. AWRA OpsHub keeps purchase price variance calculator results current across every item, supplier and location — automatically.

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