Reshoring Cost Comparison Calculator: Offshore vs Domestic Total Cost
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.
Your numbers
Total ad valorem rate applied to customs value for your HTS code and origin. Confirm with a broker.
Cost of returns, inspection, sorting and expedites on the offshore part.
Capital, storage, insurance and obsolescence.
Tooling transfer, qualification, first article and dual-running.
Your results
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.
Annual saving vs duty rate
Sweeps Duty and tariffs from 0 to 60, holding your other inputs fixed.
Landed cost from ERP history
We can help extract freight, duty and quality cost history from your ERP for a more accurate comparison. Optional.
Optional. The tool and every export work without this. No spam.
How to use it
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.
- 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
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
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
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.
- Comparing FOB to delivered
- Ignoring currency exposure
- Missing expedite and air freight
- Assuming instant domestic ramp
Frequently Asked Questions
Does this include currency risk?
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?
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?
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?
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.
Netray can help pull actual purchase price variance, freight and receiving history from your ERP so this comparison uses your real numbers.
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