Overstock Cost Calculator
Cost excess inventory through carrying charges and the markdown needed to clear it.
About Overstock Cost Calculator
Overstock costs twice: once through carrying charges while it sits, and again through the markdown needed to move it. The markdown component usually dominates, which is why aged stock should be cleared early rather than held for a better season. Every month an overstock is held raises both the carrying cost and the eventual markdown, so delay is the most expensive option available.
Formula
Overstock Cost
Overstock cost = capital × carrying rate × months ÷ 12 + capital × markdown %
- markdown
- Discount off cost needed to clear the excess
Worked example
With the default values below, Overstock Cost Calculator returns Total Cost of Overstocking of $19,680.00. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Excess units heldminimum 0
- 2,000
- Cost per unitminimum 0
- 18
- Annual carrying rateaccepts 0–100 %
- 22 %
- Months the excess is heldminimum 0 months
- 8 months
- Markdown needed to clearaccepts 0–100 %
- 40 %
Results
- Total Cost of Overstocking
- $19,680.00
- Carrying Cost While Held
- $5,280.00
- Loss on Markdown
- $14,400.00
- Capital Tied Up
- $36,000.00
- Cost per Excess Unit
- $9.84
Step by step
- 1Values used
- 2Overstock Cost
- 3Total Cost of Overstocking= 19,680.00
- 4Carrying Cost While Held= 5,280.00
- 5Loss on Markdown= 14,400.00
- 6Capital Tied Up= 36,000.00
- 7Cost per Excess Unit= 9.84
Assumptions and limits
- The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation or tax into account.
- Figures are rounded for display to 2 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Overstock Cost calculated?
Overstock cost = capital × carrying rate × months ÷ 12 + capital × markdown % Overstock costs twice: once through carrying charges while it sits, and again through the markdown needed to move it. The markdown component usually dominates, which is why aged stock should be cleared early rather than held for a better season.
Why does Overstock Cost matter?
Every month an overstock is held raises both the carrying cost and the eventual markdown, so delay is the most expensive option available.
What values do I need to enter?
This calculator takes 5 inputs: Excess units held, Cost per unit, Annual carrying rate, Months the excess is held, Markdown needed to clear. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.