Carrying Cost per SKU Calculator

About this calculator

Holding inventory isn't free even when nothing goes wrong with it — warehouse space, insurance, security, obsolescence risk, shrinkage, and the opportunity cost of capital tied up in stock all add up. Supply-chain and inventory managers summarize all of that as carrying cost = average inventory value × annual carrying rate, where the carrying rate is typically expressed as a percentage — commonly cited industry benchmarks fall in the 20–30% of inventory value per year range.

Calculating this per individual SKU (stock-keeping unit) rather than as one blended warehouse-wide number lets a business see which specific products are quietly eating margin through storage and capital costs, which directly feeds decisions like reorder quantities, safety-stock levels, and whether a slow-moving SKU should be discontinued — the same logic behind the classic Economic Order Quantity (EOQ) model.