Accounting Share · Break-even & decisions
Make or Buy Cost Comparison Calculator
Compare avoidable internal manufacturing costs with the incremental external purchase cost. Positive savings favour buying on the supplied financial assumptions.
The interactive calculator requires JavaScript. The formula and worked example below remain available.
01 / Enter your figures
Make the numbers yours.
Use one currency and consistent time periods. Amounts are shown in your input currency units; no currency conversion is performed.
02 / See the working
Your calculation
Enter your figures, then choose Calculate. Or load the worked example.
03 / Understand the method
Formula and method
Cost saving from buying = Relevant make cost − Relevant buy cost + Released-capacity benefit
Compare avoidable internal manufacturing costs with the incremental external purchase cost. Positive savings favour buying on the supplied financial assumptions.
How to use this calculator
- Collect the figures for the same entity, currency and reporting period.
- Enter each input using its label and unit. For percentages, enter 15 to mean 15%.
- Choose Calculate, inspect the breakdown and compare the result with your assumptions.
- Change one input to explore a scenario. Recalculate after edits; display rounding does not round the underlying calculation.
Inputs at a glance
- Required units: A nonnegative numeric input in the units specified by the label.
- Avoidable manufacturing cost per unit: A nonnegative numeric input in the units specified by the label.
- Avoidable fixed manufacturing costs: A nonnegative numeric input in the units specified by the label.
- Supplier price per unit: A nonnegative numeric input in the units specified by the label.
- Incremental buying and delivery costs: A nonnegative numeric input in the units specified by the label.
- Opportunity benefit if production stops: A nonnegative numeric input in the units specified by the label.
Worked example
Follow one calculation.
- Required units
- 1000
- Avoidable manufacturing cost per unit
- 18
- Avoidable fixed manufacturing costs
- 5000
- Supplier price per unit
- 24
- Incremental buying and delivery costs
- 1000
- Opportunity benefit if production stops
- 0
- Calculated result
- -2,000
Load this example in the interactive form to inspect the intermediate amounts.
Assumptions and interpretation
Exclude unavoidable allocated overhead from avoidable costs. Quality, reliability, intellectual property and capacity implications require separate judgement.
The output is a model based on the figures entered. Check source records and use the accounting or contractual definitions relevant to your task before relying on a result.
Questions about this tool
What does the make or buy cost comparison calculation measure?
Compare avoidable internal manufacturing costs with the incremental external purchase cost. Positive savings favour buying on the supplied financial assumptions.
Which assumptions can change the result?
Exclude unavoidable allocated overhead from avoidable costs. Quality, reliability, intellectual property and capacity implications require separate judgement.
Why can displayed totals differ slightly from my spreadsheet?
Calculations use the unrounded input values. Only the display is rounded. Use four or six decimal places to inspect small differences, and check the timing, sign conventions and rounding policy in your spreadsheet.
Reference and further learning
Cost-volume-profit study reference. These original learning examples apply the displayed formula; the reference does not certify or endorse this calculator.
Look up an accounting term · Practise with accounting questions
Formula and worked example checked 4 November 2026. Calculations run in your browser without sending the entered figures to Accounting Share. Report a calculation issue with the tool name, example inputs and expected result; avoid sharing confidential records.
