Budget variance
The difference between what you planned and what actually happened.
Last reviewed 12 September 2026
Variance analysis turns a budget from a wish into a feedback loop. Look at the three largest gaps each month and explain them in one sentence each.
Favourable variance is not automatically good — underspending on sales usually shows up as missed revenue a quarter later.
Formula
Variance = Actual − Budget
Frequently asked
What is budget variance?+
The difference between what you planned and what actually happened. Variance analysis turns a budget from a wish into a feedback loop. Look at the three largest gaps each month and explain them in one sentence each. Favourable variance is not automatically good — underspending on sales usually shows up as missed revenue a quarter later.
How do you calculate budget variance?+
Variance = Actual − Budget
Why does budget variance matter for founders?+
Favourable variance is not automatically good — underspending on sales usually shows up as missed revenue a quarter later.
Related terms
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