Purchase price variance (PPV): the formula, a worked example, and tracking it on Shopify purchase orders

Updated 6 November 2026 · By Senoussi, developer of True COGS at Nexus Logic Systems

Short answer

Purchase price variance = (actual price − standard price) × actual quantity. A positive result means you paid more than planned. Example: 120 units at $8.50 against a standard of $8.20 gives $36.00 unfavourable. Shopify has no standard cost, so use the last price you paid each supplier, or your current average cost, as the standard, and check each purchase order line before you mark it as ordered.

Purchase price variance calculator

Standard price, e.g. last price paid ($)

Actual price on this order ($)

Quantity

Selling price, optional ($)

The formula

Purchase price variance = (Actual price − Standard price) × Actual quantity

A positive variance means costs went up; a negative one means they went down (AccountingTools). Causes include a supplier price rise, a new supplier, a rush order with extra charges, or a cost taken from an older FIFO layer.

A worked example

Illustrative figures, checked to the cent.
Line	Amount
Standard price (last price paid)	$8.20
Actual price on the new purchase order	$8.50
Difference per unit	$0.30
× Quantity ordered	120
Purchase price variance (unfavourable)	$36.00

What it does to margin and average cost

Illustrative figures at a $19.00 selling price, checked to the cent.
	Unit cost	Margin
At the standard price	$8.20	56.84%
At the new price	$8.50	55.26%
Weighted average after receiving (80 on hand at $8.20 + 120 at $8.50)	$8.38	55.89%

(80 × $8.20 + 120 × $8.50) ÷ 200 = $8.38. The average moves less than the new price because older units are still in stock, and it keeps moving as more stock arrives at $8.50.

Purchase price variance on Shopify purchase orders

When you add a product, Shopify fills the cost from your previous purchase orders with that supplier, or from Cost per item if there is none (Shopify Help). Compare that figure with the supplier's price before you send the order.
Shopify has no standard cost and no variance report. Its purchase order cost report groups ordered quantity, supplier cost and average unit cost by purchase order and line, and you can export it (Shopify Help).
Pick one standard and keep it: last price paid shows each change; average cost shows the effect on margin.

How True COGS fits

Checks open purchase orders against the last price you paid, on every plan: a line priced above what you last paid is shown before the stock lands.
Supplier prices, under Costs: what you paid each supplier then and now, from your own receipts, with each rise flagged.
On receipt, the new weighted average is written to Cost per item, so the variance reaches your margin the day the stock arrives.

Questions merchants ask

What is purchase price variance?

The difference between what you actually paid for goods and the standard or expected price, multiplied by the quantity bought. It shows where prices moved against your plan.

What is the purchase price variance formula?

(Actual price − standard price) × actual quantity. A positive result means costs went up; a negative result means you paid less than the standard.

Is a positive purchase price variance good or bad?

Bad for margin: a positive variance means you paid more than the standard price. A negative variance means you paid less.

What standard price should a Shopify store use?

Shopify has no standard cost field. Use the last price you paid that supplier for the same variant, or your current weighted average cost, and keep using the same one so the variance is comparable.

Does Shopify report purchase price variance?

No. Shopify fills a new purchase order line from your previous orders with that supplier, but it has no standard cost and no variance report.

Try True COGS free. True COGS is an inventory costing app for Shopify by Nexus Logic Systems. It records the price you paid on every delivery (a received purchase order or a transfer), with its share of freight and duty on paid plans, keeps every price with its date, and writes your moving weighted average cost, or FIFO cost on a paid plan, to Shopify's Cost per item. It is free for up to 25 variants with a cost on record; paid plans start at $29 a month or $290 a year.

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