Make-Buy, Outsourcing & Network Design worked example

Nearshore vs Domestic Cost at 86% share of volume shifted nearshore: a worked example

Push share of volume shifted nearshore up to 86% and the picture changes. This example computes every intermediate figure at that operating point. A sourcing lead modeling the savings and switching cost of moving production from a domestic plant to a nearshore partner.

The inputs for this scenario

  • Annual sourced volume: 50,000 units/yr (unchanged)
  • Nearshore unit cost: 11.25 $/unit (unchanged)
  • Share of volume shifted nearshore: 86 % (raised for this scenario; the documented default is 75)
  • Supplier qualification and transfer cost: 85,000 $ (unchanged)

Working through the calculation

  • Applying the documented formula (Nearshore cost = annual volume x nearshore unit cost x volume shifted% + qualification and transfer cost) to the inputs above produces each figure below.
  • At this operating point the engine returns 568,750 $ for total nearshore vs domestic cost, the number this scenario is built around.
  • At this operating point the engine returns 11.38 $ / piece for nearshore vs domestic cost per unit.
  • At this operating point the engine returns 483,750 $ for variable nearshore vs domestic cost.
  • At this operating point the engine returns 85,000 $ for fixed nearshore vs domestic cost adder.

How this compares with the baseline

  • Against the tool's baseline example, where share of volume shifted nearshore sits at 75% and the headline result is 506,875 $, this scenario comes in 12.21% above the baseline at 568,750 $.
  • It computes the total annual cost of a nearshoring decision as shifted volume times nearshore unit cost plus the one-time qualification and transfer cost, and a blended cost per unit across full 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 nearshore vs domestic cost: 568,750 $ (headline result)
  • Nearshore vs domestic cost per unit: 11.38 $ / piece
  • Variable nearshore vs domestic cost: 483,750 $
  • Fixed nearshore vs domestic cost adder: 85,000 $

Run it with your numbers

  • Every input above is editable in the live Nearshore vs Domestic Cost calculator, which recalculates instantly and can be shared with the inputs intact.

Last reviewed 2026-05-12.