Build vs. Rent ROI Calculator

Don't grow arteries before you have blood flow to justify them. Webvan built $1 billion in fulfillment infrastructure before order volume justified it—they went bankrupt in 2001. Amazon waited until volume made 3PL mathematically impossible before building fulfillment centers. The difference? Murray's Law.

What is Murray's Law? Blood vessels branch with diameters optimized for the trade-off between pumping cost and infrastructure cost. Cecil D. Murray proved in 1926 that r³ = r₁³ + r₂³—the cube of parent vessel radius equals the sum of cubes of daughter vessel radii. Below certain flow volumes, capillaries are metabolically cheaper than arteries. Above certain thresholds, permanent infrastructure pays for itself.

This ROI calculator applies vascular optimization to fulfillment infrastructure decisions. The trigger conditions for analysis: 3PL costs exceeding $5M annually, 60%+ order concentration in one region, and 1,000+ daily orders sustained for 6+ months. Below these thresholds, renting (3PL) wins—like capillary networks serving low-traffic tissue. McKinsey data shows companies outsourcing logistics can reduce costs by up to 20% versus premature in-house infrastructure.

Step 1 calculates current 3PL costs (typically $4-8 per order). Step 2 estimates owned facility total cost—lease, equipment ($500K-2M), labor (20-50 people, $800K-2M), operations ($200K-500K). Step 3 computes ROI: if payback under 3 years and volume stable, build. If payback over 4 years or volume uncertain, keep renting. Warby Parker stayed with 3PL until order density in specific regions crossed the threshold. For the full Infrastructure Tax Framework with stage-specific guidance, see the Nutrient Networks chapter.