Make-Buy, Outsourcing & Network Design worked example

Contract Manufacturing Comparison at 92% share of volume actually moved to cm: a worked example

Push share of volume actually moved to cm up to 92% and the picture changes. This example computes every intermediate figure at that operating point. Use it when a sourcing team weighs a contract manufacturer quote against keeping production in-house and needs a defensible annual cost figure.

The inputs for this scenario

  • Annual units placed with contract manufacturer: 50,000 units/yr (unchanged)
  • CM all-in price per unit: 12.5 $/unit (unchanged)
  • Share of volume actually moved to CM: 92 % (raised for this scenario; the documented default is 80)
  • Tooling transfer and qualification fee: 45,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Annual CM spend = units x CM piece price x outsourced share + transfer fee) to the inputs above produces each figure below.
  • At this operating point the engine returns 620,000 $ for total contract manufacturing comparison cost, the number this scenario is built around.
  • At this operating point the engine returns 12.4 $ / piece for contract manufacturing comparison cost per unit.
  • At this operating point the engine returns 575,000 $ for variable contract manufacturing comparison cost.
  • At this operating point the engine returns 45,000 $ for fixed contract manufacturing comparison adder.

How this compares with the baseline

  • Against the tool's baseline example, where share of volume actually moved to cm sits at 80% and the headline result is 545,000 $, this scenario comes in 13.76% above the baseline at 620,000 $.
  • It computes total annual contract-manufacturing spend (units x piece price x outsourced share, plus the transfer fee) and the effective cost per unit across the annual volume. The value of this scenario is the size of the gap it exposes: that gap, priced out over a year, is the budget you can justify spending to close it.

Results at a glance

  • Total contract manufacturing comparison cost: 620,000 $ (headline result)
  • Contract manufacturing comparison cost per unit: 12.4 $ / piece
  • Variable contract manufacturing comparison cost: 575,000 $
  • Fixed contract manufacturing comparison adder: 45,000 $

Run it with your numbers

  • Every input above is editable in the live Contract Manufacturing Comparison calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.