Measures the difference between the actual cost of purchased goods and the expected cost based on budget or forecast.

What it Measures ?

How much prices have increased or decreased over time.

Relevant StakeHolders 

Buyers, Pricing Analysts

In-depth Use Case / Real-world Example

A manufacturing company producing conveyor belts calculates Purchase Price Variance (PPV) by comparing the actual price paid for raw materials like rubber or steel with the budgeted or forecasted price. If the company expects to pay ₹50 per kg of rubber, but the actual price paid is ₹55 per kg, the PPV is ₹5 more per unit. Monitoring PPV helps identify trends in price increases and can inform procurement decisions, such as renegotiating supplier contracts or finding alternative sources.