How to use the price and volume variance calculator
- List each product on its own row with its budget price, budget quantity, actual price and actual quantity. Prices are per unit.
- Add a row for every product you sell. A new product with no budget quantity is fine as long as at least one product has a budget quantity above zero.
- Read the total revenue variance at the top, then the price and volume variances. Volume is split into a quantity part and a mix part.
- Use the product table to see where each effect came from, and download the CSV to keep the full detail.
Formula
price variance = (actual price - budget price) x actual quantity
volume variance = (actual quantity - budget quantity) x budget price
quantity variance = (total actual units x budget share - budget units) x budget price
mix variance = volume variance - quantity variance
The budget share of a product is its budget units divided by all budget units. Price variance plus volume variance equals actual revenue minus budget revenue, and the totals of the product rows add up to the same figures.
Three products against a budget
The budget was 1,000 Standard units at $20, 400 Deluxe units at $45 and 2,000 Accessory units at $8, so budget revenue is $54,000. Actual sales were 950 Standard at $21, 520 Deluxe at $44 and 1,800 Accessories at $8.50, so actual revenue is $58,130 and the total variance is $4,130.
Price variance is $1,330 (Standard +$950, Deluxe -$520, Accessory +$900). Volume variance is $2,800. Of that, the quantity part is -$2,064.71, because total units fell from 3,400 to 3,270, and the mix part is +$4,864.71, because the sales moved toward the higher-priced Deluxe product. Deluxe alone adds $6,088.24 of mix.
Why split volume into quantity and mix
A single volume number can hide two different stories. If you sold fewer units in total, that is a quantity effect. If you sold the same number of units but more of the expensive ones, that is a mix effect. Splitting them tells you whether to look at demand overall or at which products customers chose.
The mix part is measured against the budget blend, so it is zero when every product sells in the same proportions as planned. In the example above the total units fell, yet revenue rose, because the mix moved toward Deluxe.
Reading favorable and adverse results
For revenue, a positive variance is favorable and a negative one is adverse. In the product table an adverse amount is written with the word adverse after the dollar figure so that the sign cannot be lost on a narrow screen. If you enter the contribution margin per unit instead of the price, the same layout gives profit variances. For related ideas see the Profit Margin Calculator and the Break-Even Calculator.
Assumptions and limits
- Prices and quantities are single figures for the period. Discounts, returns and currency effects are not modeled.
- The mix split uses the budget blend of units. A product with no budget units counts toward the mix part, not the quantity part.
- Variances are shown in dollars and rounded to cents only for display. The underlying sums use full precision.
- Whether a variance is good depends on the reason behind it. This page measures size, not cause.
Frequently asked questions
What is the difference between price variance and volume variance?
Price variance measures revenue changes caused by selling at a different price than planned. Volume variance measures changes caused by selling a different number of units, valued at the planned price.
Can I use this for cost variances?
Yes. Enter the standard cost as the budget price and the actual cost as the actual price. A higher cost then shows as a positive number, so read it as adverse for costs. The favorable wording on the page is written for revenue.
Why is the mix variance zero for a single product?
With one product there is no blend to change, so the whole volume variance is quantity. Mix only appears when at least two products sell in different proportions than planned.
Why do the product rows differ from the total by a cent?
Each figure is rounded to the cent for display only. The totals are computed from unrounded sums, so adding the rounded rows can differ from the total by a cent.