Item Price Risk Report – SourceDay

Are hidden cost increases cutting into your margins? The Item Price Risk Report in SourceDay helps you spot pricing risks before they impact your bottom line. This report allows procurement and finance teams to identify items with inconsistent pricing or significant year-over-year cost increases—so you can take action sooner.

What the item price risk report does

This report highlights two types of cost risk:

Master price issues – When purchase order (PO) prices frequently differ from the expected or master price, signaling possible misalignment
Price increase risk – When an item’s current price is at least 10% higher than it was one year ago

With this information, you can identify and prioritize risk across vendors and items, helping you stay ahead of:

Vendor pricing shifts
Supply chain disruptions
Missed updates to master pricing
Cost overruns from unplanned spend

Who can access this report?

The item price risk report is currently available for all companies at no added cost.

Not seeing this report?
If your data spans multiple sites, we may need your confirmation to enable the report. Please email support@sourceday.com and request access.

How the item price risk report works

The report is designed to help you quantify unplanned or rising costs tied to purchased items. It uses two metrics to prioritize risk:

Unplanned cost – Total spend from invoice price differences over the past 12 months
Increased cost – Spend driven by year-over-year price increases for the same item

Items are sorted by financial impact, helping you focus on the highest-risk spend first.

Calculation definitions

The Price Risks Report surfaces cost volatility and unexpected spend across your parts and vendors. Below are key metrics used in the report, along with how each is calculated:

1. Average Percent Price Change

Definition:
The average change in unit price for an item between when a purchase order is first issued and its final price at receipt.

What it means:
This tells you how much an item’s price changes, on average, between when a PO is created and when it’s finally paid.

How it’s calculated:
We look at each order for an item and compare the starting unit price (when the PO was cut) to the final unit price (when the item was received or invoiced). Then we average those changes.

Simple example:
If the price went from $10 to $12, that’s a 20% increase. If it happened consistently across multiple orders, the average percent price change would be 20%.

2. Price Deviating Risk

Definition:
An item is labeled with a Price Deviating Risk when its unit price consistently changes by more than 5% after the PO is cut, for a given vendor.

What it means:
This flags items whose prices are changing a lot after the PO is cut—suggesting unstable or outdated pricing.

How it’s flagged:
If the average percent price change is more than 5%, we mark the item as a risk.

3. Unplanned Spend

Definition:
The total dollar value of spend resulting from unit price increases after the PO was originally issued. For example, if an item increased from $10 to $12 over 100 orders, that results in $200 of unplanned spend.

What it means:
This is the extra money you spent due to price increases after the PO was issued.

How it’s calculated:
We multiply the average percent price change by your total spend on that item over the past year.

Simple example:
If you spent $10,000 on an item, and the price increased by 10% on average after POs were cut, your unplanned spend = 10% × $10,000 = $1,000.

4. Year-over-Year (YOY) Price Change

Definition:
The YOY Price Change measures how much the average unit price for an item has increased (or decreased) compared to one year ago. It helps you see long-term cost trends for a given part or material.

What This Means:
It gives you a quick view of price inflation or deflation over a 12-month period, helping you monitor cost trends and supplier consistency.

How It’s Calculated:
We compare the average unit price of the 5 most recent orders with the average unit price of the 5 most recent orders placed one year ago.

Example:

Avg. price of 5 recent orders: $110
Avg. price from 1 year ago: $100
YOY Price Change = ($110 - $100) / $100 = 10% increase

5. Price Increasing Risk

Definition:
Price Increasing Risk flags items that have become significantly more expensive over the past year. If an item’s price has increased by more than 10% year-over-year with a specific vendor, it’s marked as a cost risk.

What This Means:
This risk indicates that the item is trending upward in cost, and may require price renegotiation or vendor evaluation to control long-term margin impact.

6. Additional Spend

Definition:
Additional Spend is the total extra money you've spent over the past year due to rising unit prices—compared to what you would have spent if prices had remained at the previous year’s average. This helps quantify the real financial impact of inflation or vendor price increases.

What This Means:
It quantifies the real financial impact of inflation—answering, “How much more did I spend because prices went up?”

How It’s Calculated:
We subtract what you would have spent at the prior year’s price from what you actually spent this year.