Reshoring & Tariff Strategy worked example

Sourcing Total Cost of Ownership at 47% cost burden factor: a worked example

This worked example runs the sourcing total cost of ownership numbers for a tougher week than the baseline: 47% cost burden factor instead of the typical 65%. Captures the soft and recurring costs of a sourcing relationship beyond piece price to reveal true total cost of ownership.

The inputs for this scenario

  • Annual purchase volume: 60,000 units/yr (held at the documented default)
  • Hidden cost per unit: 1.8 $/unit (held at the documented default)
  • Cost burden factor: 47 % (the input this scenario stresses; the baseline uses 65)
  • Annual supplier management cost: 30,000 $ (held at the documented default)

Working through the calculation

  • The calculation starts from the formula this tool documents: Total cost of ownership ($) = annual volume x hidden cost per unit x burden factor% + supplier management cost.
  • Total sourcing total cost of ownership cost works out to 80,760 $ at these inputs, and this is the headline figure for the scenario.
  • Sourcing total cost of ownership cost per unit works out to 1.35 $ / piece at these inputs.
  • Variable sourcing total cost of ownership cost works out to 50,760 $ at these inputs.
  • Fixed sourcing total cost of ownership adder works out to 30,000 $ at these inputs.

How this compares with the baseline

  • Against the tool's baseline example, where cost burden factor sits at 65% and the headline result is 100,200 $, this scenario comes in 19.4% below the baseline at 80,760 $.
  • Use it during make-vs-buy decisions, supplier consolidation, reshoring business cases, or any RFQ where the lowest quote isn't obviously the lowest true cost. A result at this level usually justifies acting on the stressed input before touching anything else, because every other figure in the table is downstream of it.

Results at a glance

  • Total sourcing total cost of ownership cost: 80,760 $ (headline result)
  • Sourcing total cost of ownership cost per unit: 1.35 $ / piece
  • Variable sourcing total cost of ownership cost: 50,760 $
  • Fixed sourcing total cost of ownership adder: 30,000 $

Run it with your numbers

  • To rerun this with your own numbers, open the live Sourcing Total Cost of Ownership calculator, set cost burden factor to your actual value, and adjust the remaining inputs to match your operation.

Last reviewed 2026-05-12.