portfolios.tools

Make or Buy Decision Calculator

Free Make or Buy Decision Calculator compares in house production cost against outsource vendor quotes. Model fixed costs, variable costs, volume, and opportunity cost to choose the lowest total relevant cost option.

Make or Buy Decision Calculator
Results
{
  "makeTotal": 17000,
  "buyTotal": 18500,
  "savings": 1500,
  "recommendation": "make",
  "valid": true
}

How It Works

Enter the inputs described in each field label for Make or Buy Decision Calculator.

Make or buy analysis totals relevant in house costs against vendor quotes for a given volume. Use Special Order Pricing and EOQ Calculator on portfolios.tools when volume and inventory timing affect the make or buy choice.

Review total relevant cost for make and buy alternatives. Adjust volume to see indifference points where the recommendation flips. Run sensitivity on variable cost and purchase price before committing.

Bookmark the page for quick reruns without installing software.

Step by step

  1. Open Make or Buy Decision Calculator and enter your current inputs.
  2. Review calculated outputs and summary tables.
  3. Adjust assumptions and compare scenarios side by side.

Worked example

Adjust one input at a time to see sensitivity.

Common mistakes

Confirm tickers, percentages, and dates before acting.

Running a single baseline scenario ignores tail risks.

The Formula

Make Total = Fixed Make Cost + (Variable Make Cost × Qty) + Opportunity Cost

Buy Total = (Buy Price × Qty) + Buy Fixed Cost

Recommend lowest total relevant cost.

Include only incremental costs. Ignore sunk costs and allocated overhead that do not change with the decision.

Limitations and assumptions

Include only incremental costs. Ignore sunk costs and allocated overhead that do not change with the decision. Make or Buy Decision Calculator does not replace personalized advice.

Key terms

What does Make or Buy Decision Calculator measure
Make or buy analysis totals relevant in house costs against vendor quotes for a given volume.
How is the formula applied
The formula block on this page shows every intermediate step so you can audit the math against textbook definitions.
Model assumption
Interpret results in context rather than as automatic buy, sell, or accept signals.

Compare alternatives

Use Special Order Pricing and EOQ Calculator on portfolios.

FAQ

What does Make or Buy Decision Calculator measure?

Make or buy analysis totals relevant in house costs against vendor quotes for a given volume. This calculator runs entirely in your browser on portfolios.tools.

How is the formula applied in Make or Buy Decision Calculator?

Include only incremental costs. Ignore sunk costs and allocated overhead that do not change with the decision.

How should I interpret Make or Buy Decision Calculator results?

Make or buy analysis totals relevant in house costs against vendor quotes for a given volume.

What are common input mistakes with Make or Buy Decision Calculator?

Stress test with conservative and optimistic inputs before acting. Document assumptions when sharing outputs with colleagues or lenders.

What are the limitations of Make or Buy Decision Calculator?

Include only incremental costs. Ignore sunk costs and allocated overhead that do not change with the decision.

Related Tools

Use Special Order Pricing and EOQ Calculator on portfolios.tools when volume and inventory timing affect the make or buy choice.