Skip to content
ENExplore Calculators

Insourcing Break Even Volume Calculator

Work out insourcing break even volume instantly with clear inputs, formula shown and shareable results.

About Insourcing Break Even Volume Calculator

Insourcing break-even is the annual fixed operating cost divided by the per-unit saving. Amortising the setup investment over three years gives the more honest threshold, because a volume that only clears the operating fixed cost never repays the capital.

Formulas

Saving per unit

Saving = Outsourced price - Internal variable cost

Break-even volume

Break-even = (Fixed operating cost + Setup / 3) / Saving per unit

Worked example

With the default values below, Insourcing Break Even Volume Calculator returns Annual break-even volume of 23,449. Change any input above and every figure here is recalculated in your browser.

Inputs used

Outsourced price per unit
340
Internal variable cost per unit
195
Setup investment to insource
9,600,000
Annual fixed operating cost
3,400,000

Results

Annual break-even volume
23,449
Break-even including setup over three years
45,518
Saving per unit insourced
$145.00
Setup recovery per year
$3,200,000.00

Step by step

  1. 1Values used
  2. 2Saving per unit
  3. 3Break-even volume
  4. 4Annual break-even volume= 23,449
  5. 5Break-even including setup over three years= 45,518
  6. 6Saving per unit insourced= 145.00
  7. 7Setup recovery per year= 3,200,000.00

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation or tax into account.
  • Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

Over how many years should setup be amortised?

Match it to the period over which the volume is credible. Three years is a common discipline for anything with technology content.

What if volume is close to break-even?

Do not insource. The flexibility of an outsourced arrangement is worth more than a marginal cost saving.

Related Calculators

Insourcing Break Even Volume Calculator | Calcrivo