Enter your average inventory value and estimated cost percentages below to calculate your total annual carrying cost. See the carrying cost glossary page for how each component is typically estimated.
Total carrying cost rate
21.0% of inventory value/year
Total annual carrying cost
$21,000
How to use this number
Use your total carrying cost rate as an input to other decisions, like the economic order quantity (EOQ) calculation, which needs a carrying cost per unit to balance against ordering cost.
Break this down by product category if costs vary meaningfully—cold storage, high-shrinkage categories, or high-value items with steep insurance costs often carry a materially higher rate than your overall average.
Frequently Asked Questions
What formula does this carrying cost calculator use?
Carrying Cost = Average Inventory Value × (Capital Cost % + Storage Cost % + Insurance/Tax % + Shrinkage/Obsolescence %). Each component is expressed as a percentage of inventory value and summed into a total carrying cost rate, then applied to your average inventory value.
What is a typical carrying cost percentage?
Total carrying cost commonly falls between 20-30% of inventory value per year across most industries, though it varies by capital cost, storage type, and how prone the product category is to shrinkage or obsolescence.
What counts as the "capital cost" component?
The cost of capital tied up in inventory—what that money could otherwise earn or what it costs to borrow, expressed as a percentage. Use your business's cost of capital or borrowing rate as a starting point.
Does this calculator save my numbers?
No. This is a client-side calculation only—nothing is sent to a server or saved. Refreshing the page resets it to the defaults.
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