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Purchase price variance (PPV) is the difference between the standard cost (also known as baseline price) paid on a specific item or service and the actual amount you paid to acquire it. PPV can be either favorable or unfavorable and may be tracked for specific time periods (monthly, quarterly, yearly).

Purchase price variance is a financial metric used in procurement and supply chain management to assess the difference between the expected (also known as standard ppv meaning financeor baseline) cost of an item and its actual purchase cost. PPV measures the gap between what the company planned to pay for a product or service and what they actually paid.

Purchase Price Variance is the difference between the Actual Price paid to buy an item and the Standard Price, multiplied by the Actual Quantity of units purchased. Here is the formula: PPV = (Actual Price – Standard Price) x Actual Quantity. PPV can be used to quantify the efficiency of a company’s procurement function.

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