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Cost Per Purchase Order Calculator

Work out cost per purchase order instantly with clear inputs, formula shown and shareable results.

About Cost Per Purchase Order Calculator

Cost per purchase order isolates the transactional share of the procurement budget and divides it by order volume. Expressing it as a percentage of average order value shows immediately whether small orders are economically worth raising at all.

Formulas

Transactional cost

Transactional = Annual operating cost x Share of effort on transactional work %

Cost per order

Per order = Transactional cost / Purchase orders raised

Worked example

With the default values below, Cost Per Purchase Order Calculator returns Cost per purchase order of $607.89. Change any input above and every figure here is recalculated in your browser.

Inputs used

Annual procurement operating cost
42,000,000
Purchase orders raised per year
38,000
Share of effort on transactional work
55
Average order value
86,000

Results

Cost per purchase order
$607.89
Cost as % of average order value
0.707%
Total transactional cost
$23,100,000.00
Cost available for strategic work
$18,900,000.00

Step by step

  1. 1Values used
  2. 2Transactional cost
  3. 3Cost per order
  4. 4Cost per purchase order= 607.89
  5. 5Cost as % of average order value= 0.707
  6. 6Total transactional cost= 23,100,000.00
  7. 7Cost available for strategic work= 18,900,000.00

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What is a typical cost per order?

Manual processes run 3,000-8,000 per order; well-automated catalogue and punch-out ordering can be under 500.

Why does it matter?

Because it sets the threshold below which an order costs more to raise than it saves, which is the case for automating or using procurement cards.

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