01
Inventory holding cost formula
Add annual capital, storage, service, and risk costs to get total holding cost.
InventoryFREE · NO SIGNUP
Inventory Holding Cost Calculator
Total capital, storage, service, and risk costs, then express the annual carrying burden against average inventory value.
FREE TO USEA LOOK ATLAS TOOL
01 USE IT NOW02 NO ACCOUNT03 FIELD NOTES BELOW
WORKING INPUTS
Build the carrying-cost ledger.
LIVE RESULT
Annual holding cost
$22,000.0022.00% annual carrying rate against average inventory value.MONTHLY AVERAGE$1,833.33
CARRYING RATE22.00%
CAPITAL + STORAGE$14,000.00
SERVICE + RISK$8,000.00
15
THE COST OF WAITING ON THE SHELF
Make every carrying-cost component visible.
Inventory ties up capital, occupies space, requires service, and carries risk. A four-part ledger shows which component is driving the annual burden.
WORKING VIEW
$22,000 PER YEAR$100,000 AVERAGE INVENTORY
METHODcapital + storage + service + risk
WORKING NOTE$1,833.33 monthly · 22% carrying rate
INPUTS → CLEAR OUTPUT
THE FIELD NOTES
Quick answer above. Better decisions below.
Use the result now, then read the practical notes for assumptions, examples, limitations, and the choices behind it.
$100,000 AVERAGE INVENTORY$22,000 PER YEAR
$1,833.33 monthly · 22% carrying rate
02
Build the four-part cost ledger
Capital covers financing or opportunity cost; storage covers space and handling; service covers insurance and systems; risk covers damage, shrinkage, obsolescence, and markdowns.
03
Use carrying cost with inventory velocity
Compare the result with turnover, days on hand, reorder points, and economic order quantity for the same inventory scope.
04
Scope and denominator limits
Use average inventory at cost for the same period as annual costs.
THE PRODUCT IS NEXT
Turn the product into the campaign.
Use Look Atlas to transform one straightforward product photo into premium on-model ecommerce imagery for your store, ads, and social channels.TRY YOUR FIRST SHOOT FREENO CREDIT CARD REQUIRED
Inventory holding cost formula
Add annual capital, storage, service, and risk costs to get total holding cost.
Divide by average inventory value for carrying rate and by 12 for the monthly average.
Build the four-part cost ledger
Capital covers financing or opportunity cost; storage covers space and handling; service covers insurance and systems; risk covers damage, shrinkage, obsolescence, and markdowns.
Use one documented allocation policy and avoid counting the same cost twice.
Use carrying cost with inventory velocity
Compare the result with turnover, days on hand, reorder points, and economic order quantity for the same inventory scope.
A high carrying rate identifies a burden but does not alone determine what to discontinue or reorder.
Scope and denominator limits
Use average inventory at cost for the same period as annual costs.
When average inventory is zero, the dollar total remains valid but carrying rate is unavailable.
Questions, answered.
What belongs in inventory holding cost?
Common components are capital, storage, service, and inventory risk costs for one consistent period.
How do I calculate carrying rate?
Divide annual inventory holding cost by average inventory value and multiply by 100.
Is holding cost the same as storage cost?
No. Storage is one component; holding cost also includes capital, service, and risk.
BUILT BY LOOK ATLAS
Your product deserves more than a marketplace thumbnail.
Turn a simple product photo into polished, campaign-ready creative for your store, ads, and social channels. No studio. No reshoots.
Create your first shoot free, then keep going when you’re ready.
01 PRODUCT PHOTO → CAMPAIGN