Definition
The difference between the price actually paid for an item and its standard or contracted price, multiplied by the quantity bought.
Also called: PPV
PPV = (actual unit price − standard unit price) × quantity purchased
Example. A part with a standard cost of $4.20 bought at $4.55 for 12,000 units: PPV = ($4.55 − $4.20) × 12,000 = $4,200 unfavorable.
Key points
- An unfavorable PPV against a contract price is often a supplier billing above the agreed rate.
- Comparing invoiced prices with contract prices line by line finds overcharges a total-spend view hides.
- Favorable PPV can also hide quality or specification changes.
Figures on this page are calculated by ERPSav from the definitions shown. The explanatory text is drafted with AI from those figures and checked automatically before it is published. General information only, not legal, tax or financial advice.