What is Variance?

An introduction to variance and how it's calculated in WISK

Nick Neale avatar
Written by Nick Neale
Updated over a week ago

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After importing your sales data, adding your recipes, and having at least 2 completed inventories, you’ll be able to see your variance on the WISK Web Portal:

  1. Click on Reports / Analytics on the left-hand menu bar

  2. Click “Variance”

    The "Variance" menu is highlighted for emphasis.

What is Variance?

Variance is the difference between what was sold in your POS, and what was actually consumed/used during an inventory period.

Variance is important because it identifies your losses. For each item, you see how much product you should’ve consumed based on your sales data and POS Item mapping, and how much you actually consumed based on your inventory count/invoices.

For example, if you sell 10 shots of Jameson in your POS, and have mapped “Jameson Shot” to use 1oz of Jameson 750ml, you sold 10oz worth of product. When you take your inventory, you find out you have actually consumed 20oz of Jameson 750ml.

Variance = Sales - Consumption

In this case, Sales (10oz) - Consumption (20oz) = Variance (-10oz)

A variance of -10oz indicates a loss. You sold 10oz worth of product but actually used double that, which increases your costs.

By reducing your variances, you’ll reduce your costs and increase profitability.

Note: Your variance is only accurate if your sales and consumption data is accurate and complete. Taking accurate inventory counts and adding all of your invoices is essential. Even a single missed invoice throws off your data.

How is Variance Calculated?

As mentioned above, Variance = Sales - Consumption

Note: Your variance displays for each item as units, and can also display as the item's unit of measurement (ml, oz, etc.). To customize your display, see:

The different ways that you can display the data - units, the item's unit of measurement, or oz

In the image below, based on the sales data and recipe mapping, we sold 1.37 units of Grey Goose (750ml), and consumed 2.30 units (based on the inventory count and invoices).

Sales (1.37 units) - Consumption (2.30 units) = Variance (-0.93 units)

Since the variance value is negative, this indicates a loss.

The variance for Grey Goose Vodka

We then calculate the Variance Cost by taking the cost / unit that you have assigned to the item and multiply that by the variance. This provides the dollar value of the variance, which is -$41.84. It’s a negative number because it represents a loss.

The Variance Retail column is based on your sales items and mapping. This shows what the variance could've sold for. The variance of -0.93 units amounted to a Variance Retail of -$151.67. In other words, it's a loss of $151.67 of potential revenue.

The Variance Cost and Variance Retail Display

Note: If you have a positive value for your variance, this means that you sold more product than you consumed. This could be due to an issue with your recipe mapping, or a different product was being poured than what was sold (For example, sold Smirnoff based on the recipe, but Grey Goose was poured instead).

Checking a Variance

When looking at a variance, we want to make sure it's real and not due to a data error.

By clicking the details button on the far right, we can get more information to make sure we have entered all of our invoices, that the counts are accurate, and make sure that the POS Items have been mapped correctly.

The "Details" column is highlighted for emphasis.

You can learn more about investigating variances here:

Reasons for Variances

Variance is complicated because there are many variables involved. If just one variable in the equation is off, it misrepresents your numbers.

A variance most often occurs if you're using / pouring more than you are selling (based on recipes), but other reasons why you could see a positive or negative variance include:

  • Issue with an invoice (not entered, wrong date, missing items, duplicate invoice)

  • Miscounted items in either opening or closing inventory

  • Missing sales data

  • Incorrect POS Item/recipe mapping

  • Archived POS Items

  • Punching the wrong Items when sold

  • Duplicate items in your venue

You can learn more about the reasons for variances and how to troubleshoot them here:

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