Vendor Price Variance Calculator
Purchase price variance compares actual unit purchase cost with a chosen standard or expected unit cost, then scales the difference by units purchased.
How to use this calculator
- Enter the expected cost, actual cost and quantity purchased.
- Check that all inputs use the same units, period and population scope.
- Change one assumption at a time when comparing scenarios.
Formula used by vendor price variance calculator
Unit variance = actual unit cost − standard unit cost; total variance = unit variance × units.
- Unit variance = actual unit cost − standard unit cost; total variance = unit variance × units.
- Use a matching product specification, quantity and currency. A variance can reflect quality, freight, timing or supplier mix—not only negotiation performance.
- The tool validates inputs and rounds displayed figures for readability; it does not validate assumptions against external records.
Worked examples
Worked example
Standard cost is 12.50, actual cost is 13.20 and 1,800 units were bought.
(13.20 − 12.50) × 1,800 = 1,260 above standard.
Total purchase price variance is 1,260 unfavourable.
Understanding the result
Purchase price variance compares actual unit purchase cost with a chosen standard or expected unit cost, then scales the difference by units purchased.
Use a matching product specification, quantity and currency. A variance can reflect quality, freight, timing or supplier mix—not only negotiation performance.
Important notes
Use a matching product specification, quantity and currency. A variance can reflect quality, freight, timing or supplier mix—not only negotiation performance.
Treat the result as an estimate from the entered assumptions. For commercial, statistical, engineering or health-related decisions, verify relevant specifications and professional guidance.
Frequently asked questions
What does a negative variance mean?
Actual unit cost was below the entered standard cost.
Does this equal total cost overruns?
No. It captures unit price difference only, not usage or quantity variance.
How should I interpret this result?
Use a matching product specification, quantity and currency. A variance can reflect quality, freight, timing or supplier mix—not only negotiation performance.
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Related explanations
Learn the method behind the number or compare the terminology before using the calculator.
- How to Calculate Break-Even Point — Learn the break-even formula for units and revenue and understand fixed costs, price, and variable costs.
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This page provides a calculation tool plus explanatory information so you can understand what the result means and when the underlying method may not fit your situation.