Calculate the budget impact of a packaging price increase

The purchasing question

Total packaging spend changes when either price or purchased volume changes. To isolate a supplier price increase, hold the quantity and scope fixed. Add a volume scenario separately rather than attributing all budget growth to the unit quotation.

Calculation method

Extra spend at fixed quantity = quantity × (new unit price − old unit price). Percentage price change = (new price ÷ old price − 1) × 100 when the old price is positive. State whether the period is an order, quarter or a supplied annual plan.

Worked example

At a fixed annual plan of 100,000 kg, a rise from €3.00/kg to €3.15/kg adds €15,000 and represents a 5% price increase. If quantity also rises to 110,000 kg, spend becomes €346,500 versus €300,000 previously. The €46,500 difference includes both price and volume changes.

Using an old-price baseline, the extra 10,000 kg accounts for €30,000; the price increase on all 110,000 kg accounts for €16,500. This decomposition reconciles the total. Alternative decomposition conventions can allocate the interaction differently, so state the method.

Checks before using the result

• Use the same currency and purchase unit.
• Separate quantity and unit-price assumptions.
• Do not treat annual divided by twelve as a forecast of monthly seasonality.

Common questions