What is inventory carrying cost?

Inventory carrying cost is the total of all expenses related to storing unsold goods. The total includes intangibles like depreciation and lost opportunity cost as well as warehousing costs. A business' inventory carrying costs will generally total about 20% to 30% of its total inventory value.

What are inventory holding costs?

Typical holding costs, another name for inventory carrying costs, vary by industry and business size and often comprise 20% to 30% of total inventory value, and it increases the longer you store an item before selling it.

What are inventory service costs?

Inventory service costs refer to expenses that help a company to manage its inventory effectively. For example, a business may opt for a subscription-based inventory management system for tracking its stock. In addition, companies incur service costs to meet up with the government’s regulations, like settling tax rates and insurance.