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What is budget variance?

Understanding the concept of budget variance on your budget costs and revenues.

Updated over a week ago

When you first build a budget, it is likely that many of the prices you will use in constructing your budget will be estimates. As you reach out to vendors to obtain quotes on your supplies, estimates will gradually start to be replaced with actual prices.

The difference between the amount you had budgeted for an item and the amount you ended up paying for or earning on it is called budget variance. Budget variance is a measure of how well your budgeting performed and how realistic your initial budget estimates were.

Budget Builder tracks your variance for individual budget items through the budget item editor. On the editor you can specify two prices: a Budgeted price, which is your initial estimate for the price of the item, and a separate Actual price, which is the price you ended up paying for or earning on that item.

To enable variance to be calculated for an item, simply specify an Actual price for an item. Once the actual price for an item is specified, the variance for that item will appear on Budget Builder's Variance view and be included in your overall budget variance calculation.

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