Carrying cost: Definition, Formula & Why It Matters
Also called: Holding cost
Carrying cost is the total cost of holding unsold inventory over a period, expressed as a percentage of inventory value. It includes tied-up capital, storage, insurance, and the risk of obsolescence, and typically runs 20% to 30% of inventory value per year.
Carrying cost formula
Example
Holding $20,000 of inventory at a 25% carrying-cost rate costs about $5,000 a year.
Why it matters for Reverb sellers
Every day a product sits unsold costs you money. Understanding carrying cost reveals the true price of overbuying and makes the case for clearing slow stock rather than waiting for full price.
How Verbstack helps
Verbstack shows how much capital is tied up in inventory so you can weigh holding costs against markdowns.
Track this on every order, automatically.
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Related terms
See this number on every order.
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