After 13 years of industrial projects, I can usually tell early how a build-vs-buy decision will go. And it tends to go wrong the same way.
The engineers want to build because building is the interesting work. Finance wants to buy, because buying looks cheaper this quarter. Both sides argue from instinct. Instinct is not a decision. The decision needs numbers. And the number people start with is almost always the wrong one.
That number is the per-unit cost. Here is why it is a trap.
A few years ago, a UK-based energy aggregator came to us. They ran distributed energy systems across thousands of field sites. They used off-the-shelf industrial PCs with GSM modules, at about £1,200 per installation. With around 3,000 installations planned, that is £3.6M of hardware that does not scale. The obvious move was to build custom hardware and push the unit cost down.
And custom hardware did win on unit cost. Our conceptual custom design came in at around £140 per unit. If per-unit cost were the whole story, we would have built it.
