Costing calculator
Make vs Buy Calculator
Put internal and supplier cost on the same annual basis so sourcing decisions are grounded in total cost.
What this calculator does
- Compare internal manufacturing cost against supplier purchase cost after freight, quality, and overhead.
- Use when deciding whether to insource a part, outsource it, or keep current sourcing.
- Compare internal manufacturing cost against supplier purchase cost after freight, quality, and overhead.
Formula used
- Make annual cost = internal unit cost × volume + internal overhead
- Buy annual cost = (supplier price + freight + quality loss) × volume
- Savings = buy cost − make cost
Inputs explained
- Internal unit cost: undefined
- Supplier price: undefined
- Freight per unit: undefined
- Supplier quality loss: undefined
- Internal fixed overhead: undefined
- Annual volume: undefined
How to use the result
- Use when deciding whether to insource a part, outsource it, or keep current sourcing.
- This is a planning calculator. Validate assumptions against your process data before using the result as a final quote, schedule, or engineering decision.
Common questions
- Which inputs usually drive the make vs buy result? internal unit cost, supplier price, freight per unit, supplier quality loss, internal fixed overhead, and annual volume usually have the biggest effect. When one of those assumptions changes, rerun the calculator and compare the new $ / yr result before updating the plan.
- What does the make vs buy calculator do? Compare internal manufacturing cost against supplier purchase cost after freight, quality, and overhead.
- What inputs do I need for the make vs buy calculator? You need internal unit cost, supplier price, freight per unit, supplier quality loss, internal fixed overhead, and annual volume. Use measured values from your line, quote package, supplier data, or current production plan whenever possible.
- How should I interpret the make vs buy result? Treat the $ / yr output as a planning estimate for costing work. Compare it against process history, quoted assumptions, and operating limits before making final decisions.
Last reviewed 2026-05-12.