Carrying cost, also known as holding cost, is a significant part of inventory management. It includes various expenses associated with storing and managing inventory. This calculator helps you estimate your carrying costs by factoring in storage, capital, and risk costs, among other factors.

## How to Use the Carrying Cost Calculator

To determine your carrying cost, follow these steps:

- Enter the average value of your inventory.
- Input the percentage costs for storage, capital, and risk. These are the main components of carrying costs.
- Optionally, you can add any other percentage-based costs like insurance, taxes, or administrative expenses.
- Click 'Calculate Carrying Cost' to get the result.

### Formula Used

The formula used to calculate carrying cost is:

**Carrying Cost = Average Inventory Value × (Storage Cost % + Capital Cost % + Risk Cost % + Other Costs %)**

This formula multiplies the inventory value by the total of all percentage costs to give you the annual carrying cost.

### Example Calculation

If your average inventory value is $50,000, the storage cost is 5%, capital cost is 4%, risk cost is 2%, and other costs are 1%, the calculation would be:

**Carrying Cost = $50,000 × (5% + 4% + 2% + 1%) = $50,000 × 12% = $6,000**

This means your annual carrying cost is $6,000.