The Procurement Glossary » Savings Baseline

Savings Baseline

Spend & Analytics

Definition

The reference price or cost against which savings are measured.

Explanation

The baseline makes or breaks a savings claim. Common choices are last-paid price, average historical price or budget. Agreeing the baseline with finance up front prevents disputes over whether a 'saving' is real.

Example

Using last year's average unit price as the baseline, the new contract shows a 6% saving.

Related terms

• Cost Savings — A reduction in the price or cost of a purchase compared with a baseline, delivered through sourcing or negotiation.
• Hard Savings — Savings that produce a measurable reduction in actual spend, visible in the budget.
• Cost Avoidance — Value from preventing a cost increase or future expense, rather than reducing current spend.
• Benchmarking — Comparing prices, costs or performance against internal history, peers or the market to judge competitiveness.

Frequently Asked Questions

What is Savings Baseline?

The reference price or cost against which savings are measured. The baseline makes or breaks a savings claim. Common choices are last-paid price, average historical price or budget. Agreeing the baseline with finance up front prevents disputes over whether a 'saving' is real.

Can you give an example of Savings Baseline?

Using last year's average unit price as the baseline, the new contract shows a 6% saving.

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