# Reshoring Cost Comparison Calculator: Offshore vs Domestic Total Cost

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

## Short answer

Compares total landed cost of an offshore part with domestic production, including duty, freight, pipeline inventory, quality cost and one-time transfer cost.

## Category

supply-chain

## Industry

Discrete Manufacturing

## Audience

- COO
- Plant manager
- Sourcing director
- Finance

## Tool

**Kind:** calculator

**Currency:** $

**Inputs:**

#### Annual volume

**Key:** units

**Type:** number

**Default:** 60000

**Min:** 0

**Step:** 1000

**Unit:** units

#### Offshore unit price (FOB)

**Key:** off_price

**Type:** number

**Default:** 18.5

**Min:** 0

**Step:** 0.1

**Unit:** $/unit

#### Freight, insurance and brokerage per unit

**Key:** freight

**Type:** number

**Default:** 1.6

**Min:** 0

**Step:** 0.05

**Unit:** $/unit

#### Duty and tariffs

**Key:** duty

**Type:** number

**Default:** 12

**Min:** 0

**Max:** 150

**Step:** 0.5

**Unit:** %

**Help:** Total ad valorem rate applied to customs value for your HTS code and origin. Confirm with a broker.

#### Quality and rework cost

**Key:** quality

**Type:** number

**Default:** 3

**Min:** 0

**Max:** 30

**Step:** 0.5

**Unit:** % of price

**Help:** Cost of returns, inspection, sorting and expedites on the offshore part.

#### Offshore replenishment lead time plus safety stock

**Key:** off_days

**Type:** number

**Default:** 90

**Min:** 0

**Step:** 5

**Unit:** days

#### Domestic unit price

**Key:** on_price

**Type:** number

**Default:** 22.4

**Min:** 0

**Step:** 0.1

**Unit:** $/unit

#### Domestic lead time plus safety stock

**Key:** on_days

**Type:** number

**Default:** 21

**Min:** 0

**Step:** 1

**Unit:** days

#### Inventory carrying cost

**Key:** carry

**Type:** number

**Default:** 20

**Min:** 0

**Max:** 60

**Step:** 1

**Unit:** % per year

**Help:** Capital, storage, insurance and obsolescence.

#### One-time transfer cost

**Key:** one_time

**Type:** number

**Default:** 150000

**Min:** 0

**Step:** 5000

**Unit:** $

**Help:** Tooling transfer, qualification, first article and dual-running.

**Outputs:**

#### Offshore landed cost per unit

**Key:** off_unit

**Expr:** off_price * (1 + duty / 100 + quality / 100) + freight

**Format:** currency

**Description:** Price plus duty, quality cost and freight, before inventory carrying.

#### Offshore inventory carrying cost per year

**Key:** off_inv

**Expr:** units * off_price / 365 * off_days * carry / 100

**Format:** currency

#### Offshore total annual cost

**Key:** off_total

**Expr:** units * off_unit + off_inv

**Format:** currency

#### Domestic inventory carrying cost per year

**Key:** on_inv

**Expr:** units * on_price / 365 * on_days * carry / 100

**Format:** currency

#### Domestic total annual cost

**Key:** on_total

**Expr:** units * on_price + on_inv

**Format:** currency

#### Annual saving from reshoring

**Key:** saving

**Expr:** off_total - on_total

**Format:** currency

**Primary:** true

**Description:** Negative means domestic is more expensive on cost alone.

#### Payback on one-time cost

**Key:** payback

**Expr:** if(gt(saving, 0), one_time / saving * 12, 0)

**Format:** months

**Primary:** true

**Description:** Shows 0 when there is no cost saving.

**Chart:**

#### Annual saving vs duty rate

**Type:** line

**X:** duty

**From:** 0

**To:** 60

**Steps:** 31

**Series:**

- saving

**Disclaimer:** Cost model only. It excludes currency swings, supply risk, customer proximity benefits, incentives and tax effects. Confirm duty and customs treatment with a licensed broker.

## Content

**Intro:** Reshoring decisions often hinge on the gap between a low unit price offshore and the real cost of getting parts to your dock. This calculator builds a total landed cost and compares it with a domestic quote, then shows the payback on the transfer cost.

**Sections:**

#### How to use it

**Body:** Enter annual volume and the offshore FOB price, then add the extras: freight, duty and the cost of poor quality. Use total pipeline days for inventory, meaning in-transit time, buffer at the port and safety stock in the plant. Add the domestic quote and its much shorter lead time. Put one-time costs such as tooling transfer, qualification and parallel running in the last field. Use the sweep chart to see how sensitive the result is to the duty rate, which is often the most volatile input.

**Bullets:**

- Use real duty from a broker, not a guess
- Include safety stock days on both sides
- Add transfer and qualification costs
- Compare at several volumes

#### The formulas

**Body:** Offshore landed cost per unit equals price times one plus duty and quality percentages, plus freight. Inventory carrying cost equals annual spend divided by 365, times days of inventory, times the carrying rate. Total annual cost is units times landed cost plus carrying cost. The same method is applied to the domestic option without duty or freight. Saving is the difference, and payback in months equals the one-time cost divided by annual saving, times twelve. It is a simple total-cost-of-ownership method, not a net present value.

#### Reading the result

**Body:** A positive saving with payback under about two years usually deserves a deeper business case. A negative saving does not automatically end the idea: domestic supply can protect customer service, reduce risk of stock-outs and shorten engineering change cycles, but you should price those benefits explicitly. Test the downside by raising the offshore quality cost and lead time, and the upside by lowering domestic price to what a volume commitment could achieve.

#### Common mistakes

**Body:** Comparing ex-works price to a delivered quote is the classic error. Others include ignoring working capital, using list tariffs instead of what actually applies, and forgetting that domestic suppliers also need ramp time. Do not claim savings from inventory reduction unless you will really cut stock. Also separate cost from strategic reasons so each is judged on its own evidence.

**Bullets:**

- Comparing FOB to delivered
- Ignoring currency exposure
- Missing expedite and air freight
- Assuming instant domestic ramp

**Cta:** Netray can help pull actual purchase price variance, freight and receiving history from your ERP so this comparison uses your real numbers.

**Faq:**

#### Does this include currency risk?

**Answer:** No. Exchange rate swings can change the offshore price quickly. Run the calculator at several price points that reflect plausible currency moves, or use the price sweep by editing the offshore price field.

#### What carrying cost rate should I use?

**Answer:** Finance usually provides one. Typical manufacturing figures fall between 15 and 30 percent per year, combining cost of capital, storage, insurance, handling and obsolescence. Use your own rate when available.

#### Is nearshoring different?

**Answer:** The math is the same with different freight, duty and lead time inputs. For Mexico or Canada, check trade agreement qualification rules. We also have a separate nearshoring calculator.

#### What about incentives for domestic production?

**Answer:** Grants, tax credits and local incentives can reduce the one-time cost or the domestic price. Subtract expected incentives from the transfer cost only once they are confirmed in writing.

## Search terms

reshoring cost comparison calculator, reshoring total cost of ownership, offshore vs domestic manufacturing cost, landed cost calculator, reshoring business case template, onshoring cost analysis, total landed cost offshore sourcing, reshoring payback calculator

---
Talk to an engineer: https://netray.co/contact?intent=erp_ai | Machine catalog: https://netray.co/agent/catalog.json