At what volume does buying pay off?

Start with two cost lines—and the capacity limits that make them bend.

Separate recurring cost from investment

Outsourcing mainly follows accepted-part volume. Ownership adds annual fixed costs and an upfront investment. A recurring operating crossing does not repay that investment; use horizon cash flows for the purchase decision.

Find the unit margin

Subtract your in-house variable cost per accepted part from the comparable outsourced unit quote. If that margin is nonpositive, more volume does not create sustained operating savings against positive fixed costs. An attractive machine quote cannot repair an unfavorable marginal-cost structure.

Check the capacity wall

A crossing that requires more hours than the machine can provide is not a feasible single-machine business case. Add the necessary capacity, scale the investment and relevant fixed costs, and compare the new cash flows.

Test the assumptions that can reverse the answer

Run alternative volumes, rejection rates, effective build rates and finishing costs. Seek measured process data where the recommendation changes. A close call is a reason to improve the input evidence, not to choose the most flattering scenario.

Run the comparison →