Price variance

Invoiced price minus the contracted price the customer was entitled to on the invoice date, per line. Over is overbilling that becomes credits and findings; under is margin given away. Both usually trace to a wrong tier or an undated price file.

DefinitionInvoiced price minus the contracted price the customer was entitled to on the invoice date, per line. Over is overbilling that becomes credits and findings; under is margin given away. Both usually trace to a wrong tier or an undated price file.

Compliance on price, not just on contract

A facility can be on contract and off price in both directions.

Fix forward

Underbilling is rarely re-invoiced. Correcting the tier stops it on every future line.

How it is computed

Invoiced price minus the contracted price the customer was entitled to on the invoice date, per line, with over and under kept separate.

Example

Of 12,000 lines, 700 were invoiced above contract by $41,000 in total and 1,100 below by $63,000. Both are errors, with different consequences.

Where it goes wrong

Netted. Over and under cancel and the report says pricing is accurate.

Articles that use this term

Wallet share and penetration · Healthcare and med-tech

Ten questions a medical supplies VP of sales asks, and the table that answers each

The ten questions a vice president of sales at a medical device or supplies company puts to the account and contract teams, which systems are on contract and off compliance, which facilities buy three brands where their sisters buy one, which ship-tos are not mapped to a facility, which invoices are off the contracted price in either direction, which agreements expire with no review, what is product depth per facility against the norm, which reps cover their facilities, which systems' tier earned exceeds their tier on, what is the GPO mix of revenue, and what changed, each with the table from the order lines, the facility masters and the agreement register, and the answer to send back.

16 Sept 20263 min read Procurement and supply chain · Procurement

KPIs for procurement teams: ten measures that matter, each with its formula and the export it comes from

The ten KPIs a procurement function should run on, each with its formula, the export it comes from and what it tells you: spend under management by invoice, contracted share against actual spend by category, maverick spend by requester, savings realised against savings claimed, suppliers per category and the tail, payment terms compliance, supplier performance against own baseline, contract expiry coverage, price variance on like items, and supplier concentration. Also the three measures most teams miss, the figures to drop, the identities, and who owns what.

17 Sept 20264 min read