Work out make or buy decision instantly with clear inputs, formula shown and shareable results.
Make or buy turns on the break-even volume: fixed cost of making divided by the difference between the supplier price and the internal variable cost. Above that volume making is cheaper; below it, buying is — which is why the decision changes as demand changes.
Make cost
Make = Annual fixed cost + Variable cost per unit x Volume
Break-even volume
Break-even = Fixed cost / (Supplier price - Internal variable cost)
Only if they are genuinely avoidable by outsourcing. Costs that continue regardless should be excluded, which usually favours buying.
Capability retention, intellectual property, supply security, quality control and the difficulty of reversing the decision later.