Make-vs-Buy / TCO Calculator
Compare two sourcing options on total annual cost, including setup, quality, inventory and risk. Find the volume where the decision flips. Runs entirely in your browser.
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1. Volume and annualizing
Horizon and discount rate only spread each option's one-time cost into an annual amount.
Option A
Option B
When NOT to use this
- Two options only. There is no multi-supplier comparison.
- Costs are linear in volume: no volume discounts, price breaks or step-fixed costs (such as a second machine at higher volume). Above the capacity of a single machine, this model understates the cost of making it yourself.
- Volume is flat: no growth or seasonality. Pre-tax, single currency.
- Intellectual property, core competence and supplier dependence are not priced. The risk premium is a blunt stand-in.
- Defect costs, carrying rate, risk premium and inventory days are assumptions. The sensitivity grid shows how much they matter.