Make-Buy, Outsourcing & Network Design worked example

Nearshore vs Domestic Cost at 54% share of volume shifted nearshore: a worked example

Here is what the math looks like when conditions slip. We hold every other input steady and drop share of volume shifted nearshore to 54%, then walk the calculation through step by step. Estimate the cost of shifting sourced volume to a nearshore supplier versus keeping it domestic.

The inputs for this scenario

  • Annual sourced volume: 50,000 units/yr (held at the documented default)
  • Nearshore unit cost: 11.25 $/unit (held at the documented default)
  • Share of volume shifted nearshore: 54 % (the input this scenario stresses; the baseline uses 75)
  • Supplier qualification and transfer cost: 85,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Nearshore cost = annual volume x nearshore unit cost x volume shifted% + qualification and transfer cost.
  • Total nearshore vs domestic cost works out to 388,750 $ at these inputs, and this is the headline figure for the scenario.
  • Nearshore vs domestic cost per unit works out to 7.78 $ / piece at these inputs.
  • Variable nearshore vs domestic cost works out to 303,750 $ at these inputs.
  • Fixed nearshore vs domestic cost adder works out to 85,000 $ at these inputs.

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 23.3% below the baseline at 388,750 $.
  • The practical read: the gap between this scenario and the baseline is entirely attributable to share of volume shifted nearshore, so recovering it is worth quantifying in dollars before considering equipment or staffing changes. It captures supplier price and transfer cost but not freight lane differences, duty and tariff changes, or the inventory you may carry to buffer a longer or less proven supply line.

Results at a glance

  • Total nearshore vs domestic cost: 388,750 $ (headline result)
  • Nearshore vs domestic cost per unit: 7.78 $ / piece
  • Variable nearshore vs domestic cost: 303,750 $
  • Fixed nearshore vs domestic cost adder: 85,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Nearshore vs Domestic Cost calculator, set share of volume shifted nearshore to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.