# Cost of raw materials: pricing metric definition, thresholds and response

> Input cost by material and month against the index the formula prices on. When to act, what a move may signal, and the Revomo templates that respond.

Source: https://revomo.ai/marketplace/metrics/raw-material-cost/

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[Marketplace](https://revomo.ai/marketplace/)[Explore](https://revomo.ai/marketplace/)[Templates](https://revomo.ai/marketplace/templates/)[Metrics](https://revomo.ai/marketplace/metrics/)

Marketplace
- [Explore](https://revomo.ai/marketplace/)
- [Templates](https://revomo.ai/marketplace/templates/)
- [Metrics](https://revomo.ai/marketplace/metrics/)

Business need
- [Margin Leakage](https://revomo.ai/marketplace/collections/margin-leakage/)
- [Cost Recovery](https://revomo.ai/marketplace/collections/cost-recovery/)
- [Price Increase](https://revomo.ai/marketplace/collections/annual-price-increase/)
- [Quote & Deal Performance](https://revomo.ai/marketplace/collections/quote-deal-performance/)
- [Contract Renewal](https://revomo.ai/marketplace/collections/contract-renewal/)
- [Rebates & Incentives](https://revomo.ai/marketplace/collections/rebates-incentives/)
- [Market Response](https://revomo.ai/marketplace/collections/market-response/)

Industry
- [Industrial distribution](https://revomo.ai/marketplace/templates/?industry=distribution)
- [Machinery & industrial products](https://revomo.ai/marketplace/templates/?industry=machinery)
- [Building products](https://revomo.ai/marketplace/templates/?industry=building)
- [Chemicals & materials](https://revomo.ai/marketplace/templates/?industry=chemicals)

Search Marketplace

- [Marketplace](https://revomo.ai/marketplace/)
- [Metrics](https://revomo.ai/marketplace/metrics/)
- [Margin Leakage & Cost Recovery](https://revomo.ai/marketplace/metrics/?category=leakage)
- Metric

## Cost of raw materials

Input cost by material and month against the index the formula prices on.
[See Cost of raw materials in Revomo →](https://revomo.ai/contact/?source=marketplace&type=metric&artifact=raw-material-cost&name=Cost+of+raw+materials&collection=cost-recovery)

### Why it matters

Input cost is what formula prices and surcharges are meant to follow. Watching it against the index shows when the formula is lagging and margin is paying for the lag.

### Act when

Up over x% in one month, or a steady rise over a quarter

Thresholds are set per business; the ones written as x and y are placeholders your team fills in.

### What it may signal

Supply volatility, contract prices lapsing.

### What to do

The templates that respond when this metric moves.
- [Cost pass-through scenario](https://revomo.ai/marketplace/templates/cost-pass-through/)*template*
- [Index-linked and formula pricing](https://revomo.ai/marketplace/templates/index-linked/)*template*
- [Cost index forecast](https://revomo.ai/marketplace/templates/cost-index-forecast/)*template*

### How it’s defined

Formula
`'Material cost' / 'Material cost (prior period)' - 1`

Required context
Costs, Index series

Dimensions
Material, Plant, Family

Cadence
Reviewed monthly

Lineage
Every value traces to the invoice line or governing record it was computed from.

Use in
**Alerts**: an agent watches it against a rule and alerts you when it trips.

### Relevant industries

[Chemicals & materials](https://revomo.ai/marketplace/metrics/?industry=chemicals)[Machinery & industrial products](https://revomo.ai/marketplace/metrics/?industry=machinery)[Building products](https://revomo.ai/marketplace/metrics/?industry=building)

Type
Metric

Category
[Margin Leakage & Cost Recovery](https://revomo.ai/marketplace/metrics/?category=leakage)

Use in
Alerts

Cadence
Monthly

Industries
Chemicals & materials, Machinery & industrial products, Building products

Business need
[Cost Recovery](https://revomo.ai/marketplace/collections/cost-recovery/), [Market Response](https://revomo.ai/marketplace/collections/market-response/)

[See this in Revomo →](https://revomo.ai/contact/?source=marketplace&type=metric&artifact=raw-material-cost&name=Cost+of+raw+materials&collection=cost-recovery) Defined, monitored and connected to action, on representative data or your own.

### Related metrics

- Margin Leakage & Cost Recovery #### [Freight recovery rate](https://revomo.ai/marketplace/metrics/freight-recovery/) Freight billed against freight paid, by lane and account. **Act when**Under 100% on any lane for two months Alerts · Against plan · After a decision
- Margin Leakage & Cost Recovery #### [Freight, packaging and indirect costs](https://revomo.ai/marketplace/metrics/indirect-cost-share/) Freight, packaging and other indirect costs as a share of invoice, so the true landed cost is what margin is measured against. **Act when**Up over x% of invoice Alerts
- Margin Leakage & Cost Recovery #### [Surcharge capture rate](https://revomo.ai/marketplace/metrics/surcharge-capture/) Surcharges applied against surcharges due, and the waivers by account and approver. **Act when**Under 90%, or waivers rising Alerts · After a decision

### See Cost of raw materials on your commercial data.

We will show how Revomo defines, monitors and connects this metric to commercial action, using representative data or your own.
[See this on your commercial data →](https://revomo.ai/contact/?source=marketplace&type=metric&artifact=raw-material-cost&name=Cost+of+raw+materials&collection=cost-recovery)[All metrics](https://revomo.ai/marketplace/metrics/)