Ecommerce
Holding stock costs far more than warehouse rent, and the annual rate is usually a fifth of the stock value.
Average inventory and the rate
Average value of inventory held, in your local currency.
Annual holding cost as a percent of inventory value (often 20-30%).
Annual Carrying Cost
12,500
Yearly cost of holding inventory, in your local currency.
Formula verified 13 September 2026
Monthly Carrying Cost
1,041.67
Annual carrying cost divided by twelve.
Carrying Cost Rate
25.00%
The holding-cost rate applied.
Estimate only — platform fees and costs vary; verify current rates. Read the full disclaimer ↓
Your single carrying-cost rate split into the three buckets it bundles, using a typical weighting — capital, storage, and risk — applied to your average inventory value. The split is illustrative; your own mix depends on warehouse costs, financing, and how perishable or obsolescence-prone the goods are.
| Component | Typical share of the rate | Annual cost (local currency) |
|---|---|---|
| Cost of capital | ~50% (tied-up cash, financing) | 6250 |
| Storage & handling | ~30% (space, labour, utilities) | 3750 |
| Risk: insurance, shrinkage, obsolescence | ~20% | 2500 |
| Total annual carrying cost ◀ | 100% of the rate | 12500 |
Estimates only — not financial, tax, or professional advice.
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What it calculates: Annual Carrying Cost, Monthly Carrying Cost, Carrying Cost Rate.
Updated 5 June 2026 · Transparent assumptions
Carrying cost has four parts. Capital is the return the money could have earned elsewhere and is usually the largest. Storage covers space, handling and utilities. Service covers insurance and stock taxes. Risk covers obsolescence, damage, theft and markdown.
Businesses that count only storage typically arrive at around 5% and understate the real figure by a factor of three or four. Published estimates cluster between 15% and 30% of inventory value a year.
Capital cost is the opportunity cost of the cash tied up. If the business borrows at 12%, or could deploy the money into marketing returning more than that, then every unit of stock carries that rate whether or not anyone invoices for it.
Because no supplier bills for it, it is the component most often left out — and it is the one that makes overstocking genuinely expensive rather than merely untidy.
Carrying cost applies to stock held over time, so the input is average inventory value rather than a snapshot. A simple average of opening and closing balances works; a monthly average is better for a seasonal business.
Using a peak figure overstates the cost and a trough figure understates it, and for a business with a heavy seasonal build the two can differ by several multiples.
This rate is the input that makes EOQ, safety stock sizing and dead stock decisions quantitative rather than instinctive. Without it, holding stock appears free and every ordering decision defaults to ordering more.
It is also the number that makes the case for faster turns. Halving average inventory at a 20% carrying rate returns 10% of the old stock value to the business every year, permanently.
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Business disclaimer
Results are estimates for planning and analysis based on the figures you enter. They are not accounting, tax, or financial advice — verify with your own records and a qualified professional before making decisions.
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Published 13 September 2026