Procurement Savings Realised Calculator

Work out procurement savings realised instantly with clear inputs, formula shown and shareable results.

About Procurement Savings Realised Calculator

Procurement savings must be reported on a realised basis — the annualised saving pro-rated for the months actually elapsed since implementation — not on the annualised figure from day one. Confusing the two is the main reason finance and procurement report different numbers.

Formulas

Annualised saving

Annualised = (Previous price - New price) x Annual volume

Realised saving

Realised = Annualised saving x Months elapsed / 12

Worked example

With the default values below, Procurement Savings Realised Calculator returns Realised saving to date of $4,368,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Previous unit price: 840
New unit price: 762
Annual volume: 96,000
Months since implementation: 7

Results

Realised saving to date: $4,368,000.00
Annualised saving: $7,488,000.00
Saving per unit: $78.00
Saving as % of previous price: 9.29%

Step by step

1Values used
2Annualised saving
3Realised saving
4Realised saving to date= 4,368,000.00
5Annualised saving= 7,488,000.00
6Saving per unit= 78.00
7Saving as % of previous price= 9.29

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, tax or fees or charges into account.
Figures are rounded for display to 2 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

Why does finance disagree with procurement on savings?

Because procurement reports annualised savings at signature while finance sees realised savings against budget. Reporting both removes the argument.

What if volume falls?

Then realised savings fall proportionally. Savings should always be recalculated on actual volume, not the volume assumed at negotiation.