# Broker vs Franchise Component Buy Cost Calculator

> Source: https://netray.co/tools/broker-vs-franchise-component-buy-cost-calculator
> Publisher: Netray (netray.co), AI and integration engineering for ERP and manufacturing systems.
> Section: Free Tools

## Short answer

Compare a broker quote against franchise lead time using test cost, counterfeit probability and the cost of waiting.

## Category

supply-chain

## Industry

Electronics Manufacturing

## Audience

- Electronics buyer
- Commodity manager
- Supply chain manager

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Quantity needed

**Key:** qty

**Type:** number

**Default:** 5000

**Min:** 1

**Step:** 100

**Unit:** pcs

#### Franchise unit price

**Key:** franchise_price

**Type:** number

**Default:** 1.2

**Min:** 0

**Step:** 0.01

**Unit:** $/pc

#### Broker unit price

**Key:** broker_price

**Type:** number

**Default:** 4.8

**Min:** 0

**Step:** 0.01

**Unit:** $/pc

#### Authentication and test cost for the lot

**Key:** test_cost

**Type:** number

**Default:** 1800

**Min:** 0

**Step:** 50

**Unit:** $

**Help:** Visual, X-ray, decap sample, electrical test, lab fees.

#### Probability the lot is bad

**Key:** counterfeit_prob

**Type:** slider

**Default:** 5

**Min:** 0

**Max:** 30

**Step:** 1

**Unit:** %

**Help:** Your own estimate for this broker and part type.

#### Chance testing catches a bad lot

**Key:** detect

**Type:** slider

**Default:** 85

**Min:** 0

**Max:** 100

**Step:** 5

**Unit:** %

#### Cost if a bad lot reaches product

**Key:** failure_cost

**Type:** number

**Default:** 60000

**Min:** 0

**Step:** 1000

**Unit:** $

**Help:** Rework, field returns, recall handling, customer penalties.

#### Purchase value recovered when a bad lot is caught

**Key:** recovery

**Type:** slider

**Default:** 70

**Min:** 0

**Max:** 100

**Step:** 5

**Unit:** %

#### Days saved versus franchise lead time

**Key:** days_saved

**Type:** number

**Default:** 56

**Min:** 0

**Step:** 1

**Unit:** days

#### Cost of delay per day

**Key:** delay_cost

**Type:** number

**Default:** 900

**Min:** 0

**Step:** 50

**Unit:** $/day

**Outputs:**

#### Franchise purchase cost

**Key:** franchise_total

**Expr:** qty * franchise_price

**Format:** currency

#### Broker purchase plus test

**Key:** broker_total

**Expr:** qty * broker_price + test_cost

**Format:** currency

#### Expected loss, bad lot not caught

**Key:** undetected

**Expr:** counterfeit_prob / 100 * (1 - detect / 100) * failure_cost

**Format:** currency

#### Expected loss, bad lot caught

**Key:** detected

**Expr:** counterfeit_prob / 100 * (detect / 100) * qty * broker_price * (1 - recovery / 100)

**Format:** currency

#### Broker all-in expected cost

**Key:** broker_all_in

**Expr:** broker_total + undetected + detected

**Format:** currency

#### Value of the days saved

**Key:** delay_value

**Expr:** days_saved * delay_cost

**Format:** currency

#### Net benefit of buying from the broker

**Key:** net_benefit

**Expr:** delay_value - (broker_all_in - franchise_total)

**Format:** currency

**Primary:** true

**Description:** Positive means the days saved are worth more than the extra expected cost.

#### Broker premium over franchise

**Key:** premium_pct

**Expr:** if(gt(franchise_price, 0), (broker_price / franchise_price - 1) * 100, 0)

**Format:** percent

**Chart:**

#### Net benefit vs probability the lot is bad

**Type:** line

**X:** counterfeit_prob

**From:** 0

**To:** 30

**Steps:** 30

**Series:**

- net_benefit

**Disclaimer:** Planning model. Probabilities are your estimates, not statistics. Use test labs and your quality system for acceptance decisions.

## Content

**Intro:** When a part is on allocation, the franchise lead time may be 40 weeks while a broker can ship next week at four times the price. This calculator puts both options on one number: the extra purchase cost, the testing bill, the expected loss from a bad lot, and the value of the days you save.

**Sections:**

#### How to use the calculator

**Body:** Enter the quantity and both unit prices, then the cost of authentication testing for the lot. Set the probability that the lot is bad and the chance your test plan catches it. Enter what a bad lot would cost if it reached product, and what you could recover from the broker if you catch it. Finally enter the days you save and your daily cost of waiting. The primary result is the net benefit of buying from the broker.

**Bullets:**

- Use a delay cost based on real line-down or penalty exposure, not a guess of lost sales.
- Keep the bad-lot probability honest. Use a higher value for obsolete or high-demand parts.
- Run the chart to see how quickly the answer flips as risk rises.

#### The model behind it

**Body:** The model is an expected-value comparison. Broker all-in cost is purchase plus testing plus two expected losses. If a bad lot slips through, you pay the failure cost. If testing catches it, you lose the unrecovered share of the purchase. The value of speed is days saved times the daily delay cost. Net benefit equals that value minus the extra expected cost over the franchise price. It does not model risk aversion, so a safety-critical or defense application may justify a higher bar than break-even.

#### Reading the result

**Body:** A strongly positive net benefit suggests the broker route is rational if testing is done properly. Near zero, prefer franchise or a partial buy. Negative means you are paying for speed you do not need. For regulated work, many contracts restrict independent distributor purchases, so check your flowdown requirements before using any number from this page. AS6081 and AS5553 describe counterfeit avoidance practices that buyers commonly reference.

#### Common mistakes

**Body:** The usual error is leaving out the cost of a bad lot reaching product, which makes every broker buy look cheap. The second is treating testing as perfect. Sampling reduces risk but does not eliminate it, which is why the detection rate is an input. Also remember that a broker price today can fall when allocation eases, so a spot buy for the whole build quantity is not always necessary.

**Cta:** If your ERP holds approved vendor status, receipt inspection results and past nonconformances, Netray can help surface that history at the moment a buyer evaluates a spot buy.

**Faq:**

#### Is a broker buy always counterfeit risk?

**Answer:** No. Many independent distributors sell genuine surplus. Risk depends on the part, the source and the test plan. The calculator lets you enter a low probability for a trusted source and a higher one for an unknown source.

#### What testing should I budget?

**Answer:** Typical plans combine external visual inspection, marking permanence, X-ray or acoustic scanning, and electrical sampling, with decapsulation for higher-risk parts. Lab quotes vary widely, so use your actual quote for the lot.

#### How do I estimate the cost of delay?

**Answer:** Add idle labor, expediting freight, contractual late penalties and deferred revenue margin per day. Avoid counting the same loss twice. Ask finance for the contribution margin per day of a stopped line.

#### Can I split the buy between franchise and broker?

**Answer:** Yes. Run the calculator for the quantity you need now from the broker, and keep the balance on a franchise order. Splitting limits exposure while still covering the near-term gap.

## Search terms

broker vs franchise distributor, independent distributor buy risk, counterfeit component expected cost, spot buy electronic components calculator, excess broker premium calculator, component shortage broker buy, grey market component cost

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