payments Free Tool

Carrying Cost Calculator

Calculate the true annual cost of holding inventory. Carrying costs typically run 20–30% of inventory value.

Warehouse rent, utilities, labor

Obsolescence, damage, theft

What you could earn if capital wasn't tied up in stock

Typical Breakdown

Storage5–10%
Insurance & Taxes2–5%
Shrinkage3–8%
Opportunity Cost8–15%
Total20–30%

Reduce carrying costs by 30%

ReOrder AI identifies excess inventory and dead stock to help you reduce carrying costs across your catalog.

rocket_launch Start Free Trial

More Tools

warningStockout Calculator calculateEOQ Calculator autorenewInventory Turnover Calculator View all tools arrow_forward

Frequently Asked Questions

What is inventory carrying cost?

expand_more

Carrying cost is the total expense of storing unsold inventory. It includes warehouse rent and utilities, insurance and property taxes, depreciation and shrinkage (damage, theft, obsolescence), and the opportunity cost of capital tied up in stock. For most e-commerce businesses, this runs 20-30% of inventory value per year.

What is a typical carrying cost percentage?

expand_more

Most businesses have carrying costs between 20-30% of inventory value annually. Storage typically accounts for 5-10%, insurance and taxes 2-5%, shrinkage and depreciation 3-8%, and opportunity cost of capital 8-15%. Many merchants underestimate the opportunity cost component.

How do I reduce carrying costs?

expand_more

Key strategies: use EOQ to right-size order quantities, improve demand forecasting to avoid overstocking, negotiate better storage and shipping rates, identify and liquidate dead stock early, and consider just-in-time ordering for products with stable demand. AI-powered tools like ReOrder AI automate these optimizations.