Make-Buy, Outsourcing & Network Design worked example

Insourcing Payback with equipment and setup investment to bring work in-house of 62,500 $: a worked example

This scenario runs the insourcing payback calculation on the strong side: equipment and setup investment to bring work in-house of 62,500 $, with every other input held at its documented default. Use it when insourcing payback in make-buy, outsourcing and network design is being put in front of a capital committee and the savings story needs to hold up.

The inputs for this scenario

  • Equipment and setup investment to bring work in-house: 62,500 $ (raised for this scenario; the documented default is 25,000)
  • Annual savings vs. current outsourced spend: 18,000 $ / yr (unchanged)
  • Annual added in-house support and labor cost: 2,500 $ / yr (unchanged)

Working through the calculation

  • Applying the documented formula (Net annual insourcing payback savings = annual insourcing payback savings - annual insourcing payback support cost) to the inputs above produces each figure below.
  • At this operating point the engine returns 4.03 yr for insourcing payback payback period, the number this scenario is built around.
  • At this operating point the engine returns 15,500 $ / yr for net annual insourcing payback savings.
  • At this operating point the engine returns 62,500 $ for insourcing payback investment.
  • At this operating point the engine returns 15,000 $ for five-year net insourcing payback value.

How this compares with the baseline

  • Against the tool's baseline example, where equipment and setup investment to bring work in-house sits at 25,000 $ and the headline result is 1.61 yr, this scenario comes in 150% above the baseline at 4.03 yr.
  • Use it when evaluating whether to reshore or in-source a part currently bought from a contract manufacturer, before committing capital to equipment and qualification. Treat this as a target state: the delta against the baseline quantifies what the improvement is worth before you commit to chasing it.

Results at a glance

  • Insourcing payback payback period: 4.03 yr (headline result)
  • Net annual insourcing payback savings: 15,500 $ / yr
  • Insourcing payback investment: 62,500 $
  • Five-year net insourcing payback value: 15,000 $

Run it with your numbers

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

Last reviewed 2026-05-12.