How do I calculate inventory carrying cost?

Multiply average inventory value by the annual carrying rate. For example, $100,000 of inventory at a 25% rate gives $25,000 of carrying cost per year.

What does carrying cost include?

Four families: capital tied up, storage (space and handling), service (insurance and taxes), and risk (obsolescence, damage, theft).

What carrying rate should I use?

A 20% to 30% rate is typical depending on industry and product type. 25% is a common default when you do not have a precise figure.

Why does carrying cost matter?

Because stock ties up capital and generates ongoing costs. High carrying cost on slow-moving products signals capital that could work harder elsewhere.

Free Tool · Updated June 30, 2026

Inventory Carrying Cost Calculator

Estimate what holding your inventory really costs each year: capital, storage, service, and risk, rolled into one carrying rate. Free, no email.

Four cost familiesCapital tied up, storage, service, and risk, rolled into one annual carrying rate.
One rate, not four calculationsEnter average inventory value and a carrying rate, often 20% to 30%, to get the annual cost.
Spot dead capitalA high carrying cost on slow-moving stock signals money that could be working harder elsewhere.

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Average inventory value ($) Average value held at cost

Annual carrying rate (%) Capital, storage, service, risk

Annual carrying cost$25,00025% of $100,000 held

Average inventory value$100,000

Carrying rate25%

Annual carrying cost$25,000

Carrying cost bundles capital, storage, service, and risk. A 20% to 30% annual rate is typical; 25% is a common default.

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How This Calculator Works

Annual carrying cost is calculated as average inventory value times the annual carrying rate. That rate bundles four cost families: capital (money tied up in stock), storage (space, handling, energy), service (insurance and taxes), and risk (obsolescence, damage, theft). A 20% to 30% rate is typical; 25% is a common default.

How This Maps to Odoo Inventory

Odoo Inventory keeps stock value current through automated valuation, which gives a reliable base for this calculation. Cross that value with turnover and overstock visible in reporting, and you see where carrying cost piles up. Octura configures valuation, reporting, and reordering rules to bring that cost down without creating stockouts.

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Backed by real migrations

Numbers like yours, validated on real migrations

Three engagements where the projection turned into operational reality on Odoo. Read the full case studies on the migration service page.

ManufacturingV12 → V17
Industrial Manufacturer, Texas
12custom modules ported, zero data lost
DistributionV14 → V18
Wholesale Distributor, Quebec
30%faster page loads after the upgrade
Professional ServicesCE → Enterprise
Consulting Firm, Brussels
0hproduction downtime during cutover

Frequently Asked Questions

01How do I calculate inventory carrying cost?
Multiply average inventory value by the annual carrying rate. For example, $100,000 of inventory at a 25% rate gives $25,000 of carrying cost per year.
02What does carrying cost include?
Four families: capital tied up, storage (space and handling), service (insurance and taxes), and risk (obsolescence, damage, theft).
03What carrying rate should I use?
A 20% to 30% rate is typical depending on industry and product type. 25% is a common default when you do not have a precise figure.
04Why does carrying cost matter?
Because stock ties up capital and generates ongoing costs. High carrying cost on slow-moving products signals capital that could work harder elsewhere.