Inventory Carrying Costs

Inventory carrying costs are the costs brands pay for storing and managing inventory that they haven't yet sold.

What Are Inventory Carrying Costs?

Inventory carrying costs are a central metric that brands calculate when managing their inventory and assessing their profit and loss. These costs are associated with any fees for holding, storing, or managing unsold goods — often including transportation fees, taxes, and depreciation of goods over time. Because these costs can quickly add up, particularly when brands overstock their inventory, it's critical to regularly assess this metric as it relates to customer demand and products sold. Using an inventory management system can streamline this process. These systems automatically measure inventory carrying costs, as well as a number of other inventory-related costs, to optimize the inventory management process.

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