Inventory Carrying Cost
Carrying cost from your own components — capital, storage, service, risk — as % of stock value or amounts: rate, annual and per-unit cost, per turn, saving.
The carrying-cost rate and its breakdown by component, the annual, monthly, daily and per-unit cost, inventory turns and days from COGS with the cost per turn, and what a leaner stock level saves.
Example: 500 000 of stock at 8 % capital, 4 % + 12 000 storage, 2 % service and 3 % risk carries 97 000 a year (19.4 %), 4.85 per unit over 20 000 units, 24 250 per turn; 20 % less stock saves 17 000.
Four components,
all of them yours.
What the components are, how the rate and per-unit figures follow, and what the reduction line assumes.
The components
Carrying cost is usually built from four parts: capital (the cost of the money tied up in stock — your cost of capital or the return it could earn), storage (space, handling, utilities), service (insurance, inventory taxes, administration) and risk (shrinkage, damage, obsolescence). Each is entered as a % of the average inventory value, as an amount per year, or both; the page adds them and expresses the total as a rate. No "typical 20–30 %" figure is assumed.
Derived figures
Annual cost ÷ 12 and ÷ 365 give the monthly and daily cost; ÷ average units on hand gives the cost per unit-year. With cost of goods sold, turns = COGS ÷ average inventory, days of stock = 365 ÷ turns, and the carrying cost per turn = annual cost ÷ turns — what each cycle of stock costs to hold.
Holding less
The what-if scales the percentage-based components with the lower value and leaves the fixed amounts unchanged, because rent and insurance premiums do not fall automatically when stock does — the saving shown is the conservative one. Nothing leaves the browser; the same four anonymous usage counts as the rest of the site apply.
SOURCES
- Carrying cost = Σ (value × component %) + fixed amounts; rate = cost ÷ average inventory value; turns = COGS ÷ average inventory; days = 365 ÷ turns; no typical percentage is assumed
Last reviewed 22 September 2026. How results are checked: How we verify.