Enter Purchase Inputs
Formula Used
Standard Base Price + Standard Logistics + Standard Duty and Fees - Standard Discount
Actual Base Price + Actual Logistics + Actual Duty and Fees - Actual Discount
(Actual Effective Unit Cost - Standard Effective Unit Cost) × Actual Quantity
Standard Effective Unit Cost × Actual Quantity
Actual Spend - Planned Spend
A negative purchase price variance is usually favorable because the actual effective unit cost is lower than the standard cost. A positive value is usually unfavorable because it increases landed inventory cost and reduces gross margin.
How to Use This Calculator
- Select the display currency for your report.
- Enter the planned quantity and the actual purchased quantity.
- Provide expected and actual base price per unit.
- Add expected and actual logistics cost per unit.
- Enter expected and actual duty, tax, or other buying fees.
- Insert any expected and actual discounts or rebates per unit.
- Click the calculate button to display the result above the form.
- Review PPV, budget variance, and the Plotly graph, then export CSV or PDF if needed.
Example Data Table
| Order ID | SKU | Standard Effective Unit Cost | Actual Effective Unit Cost | Actual Quantity | PPV | Interpretation |
|---|---|---|---|---|---|---|
| PO-1001 | SKU-A12 | 12.40 | 13.10 | 220 | 154.00 | Unfavorable price movement |
| PO-1002 | SKU-B40 | 8.60 | 8.20 | 300 | -120.00 | Favorable negotiated outcome |
| PO-1003 | SKU-C88 | 24.80 | 25.90 | 120 | 132.00 | Margin pressure increased |
| PO-1004 | SKU-D17 | 5.40 | 5.10 | 500 | -150.00 | Effective savings achieved |
Frequently Asked Questions
1) What does purchase price variance measure?
It measures how much actual effective purchase cost differs from the expected standard cost for the quantity you actually bought.
2) Why is actual quantity used in the PPV formula?
PPV isolates the price effect only. Using actual quantity keeps the focus on supplier cost movement rather than demand or ordering volume changes.
3) Is a negative variance always good?
Usually yes, because actual effective cost fell below the standard. Still, verify product quality, lead times, and hidden fees before calling it a true win.
4) Should shipping and duty be included?
Yes. Ecommerce buyers often care about landed cost, not just vendor price. Including logistics and fees gives a more realistic margin view.
5) How often should ecommerce teams review PPV?
Review it for every major purchase cycle, supplier renegotiation, seasonal restock, and monthly margin analysis to catch cost drift early.
6) Can this help with vendor negotiations?
Yes. The output gives evidence of cost inflation, savings captured, and trend changes, which strengthens negotiation with suppliers and internal finance teams.
7) What is the difference between PPV and budget variance?
PPV isolates price impact at actual volume. Budget variance compares actual spend with planned spend, so it includes both price and quantity effects.
8) Can I use this for marketplace or wholesale channels?
Yes. It works for DTC, marketplace, wholesale, and cross-border buying whenever you can define standard cost, actual cost, and purchased quantity.