Calculator

Inventory Carrying Cost Calculator

Stock does not just cost money when you buy it. It keeps costing money while it sits. Use this calculator to turn working-capital drag, storage, insurance, and shrink into a visible annual and monthly cost instead of treating inventory as neutral.

Estimate annual and monthly carrying cost fast
See how holding stock changes the true margin floor
Translate inventory drag into cost per unit per month

Calculate inventory carrying cost

Enter the average value of inventory held, units on hand, capital cost, expected obsolescence or markdown drag, storage cost, insurance, and shrink or other monthly overhead. The result shows what holding stock is costing before a single extra unit is sold.

Average inventory value Average dollar value of stock being held. Units on hand Used to turn monthly drag into a per-unit burden. Capital cost rate % Opportunity cost or financing rate attached to inventory value. Obsolescence or markdown rate % Expected annual degradation, markdown, or ageing drag. Storage cost per month Warehouse or storage burden allocated monthly. Insurance cost per month Inventory insurance or protection cost. Shrink or other monthly overhead Shrink, cycle count losses, or related monthly drag.

Three carrying cost scenarios.

Formula

What carrying cost really means

Annual carrying cost = (Inventory value × (Capital cost rate + Obsolescence rate)) + Annual storage, insurance, and shrink overhead

Inventory is not passive. It consumes capital, space, insurance, and tolerance for markdown risk. This model makes those layers visible so you can judge whether the product margin still looks good once stock is held for real, not just purchased once.

Where carrying cost gets hidden

Teams focus on unit margin and ignore time-in-stock completely.
Capital cost feels abstract, so it never gets attached to the SKU economics.
Storage and shrink live in ops budgets instead of the product margin discussion.

Useful next step

Once carrying cost is visible, connect it back to landed cost, 3PL, and payout margin to decide whether the inventory posture still deserves more stock or more ad spend.