Pricing & profit

Make or Buy Calculator

Compare avoidable in-house production costs with a supplier quote, including delivery and opportunity costs.

Free, no sign-upRuns in your browserFormula & methodology
units
US dollars
US dollars
US dollars
US dollars
US dollars

Results update as you type. Your numbers stay in this browser.

Savings from buyingExample$1,200
Relevant make cost
$10,500
Relevant buy cost
$9,300

Understand the result

How to calculate make or buy

Savings from buying = (units × make cost + avoidable fixed + opportunity cost) − (units × supplier price + delivery)

Unavoidable fixed costs are excluded from both alternatives. Quality, lead time, supplier risk and tax are not valued by this model.

Worked example

An illustrative scenario. “Reset to example” restores it in the calculator.

Units required
1,000 units
In-house variable cost per unit
$8
Avoidable in-house fixed costs
$2,000
Opportunity cost of in-house capacity
$500
Supplier unit price
$9
Total delivery and procurement costs
$300

Savings from buying: $1,200

Common questions

Make or Buy FAQ

What does a negative saving mean?

Buying costs more under the entered assumptions. A positive value favors buying on these incremental costs alone.